PROVING OUR WORTH
The Kingsbury PLC | Annual Report 2017/18
PROVING OUR WORTH As we conclude our fifth year of operations, at The Kingsbury PLC, we look back on all that we have achieved. Within a short span of time, The Kingsbury has gained a leading position in the hospitality sector, widely acclaimed as a destination of choice both locally and across the world. Although the year has been a challenging one, as we go forward, we are confident of being on the right track for lasting success. We know that our creativity, commitment and vision for the future will help us to build on our strong foundations, proving our true worth today, as we seek even greater value creation for our loyal stakeholders in the years that lie ahead. The Kingsbury PLC
2 Annual Report 2017/18 ABOUT US
Bejeweled as one of the finest five-star Colombo hotels located in-between Galle Face Green, the World Trade Centre and the Dutch Hospital Precinct, we welcome you to The Kingsbury Colombo. With easy access for shopping, entertainment and your business needs, we will ensure your stay is perfect and your experiences are complete.
The Kingsbury PLC is renowned across the globe as a shining benchmark in the hospitality industry. With its distinctive style, elegance and sophistication, The Kingsbury is considered the destination of choice by all who visit the city of Colombo.
thekingsburyhotel.com
3 The Kingsbury PLC LOCATION
Centrally located in Colombo’s busy city hub, and easily accessible to the ever- expanding Port City, The Kingsbury is a haven for travellers, tourists and local visitors alike. Situated in close proximity to the central business district, the hotel ideally located to cater to the needs of every guest who ventures within.
4 Annual Report 2017/18 CONTENTS
Operational Highlights...... 6 Financial Highlights...... 7 Five years at a Glance...... 8 Chairman’s Review ...... 10 Managing Director’s Review ...... 14 Board of Directors...... 18 Corporate Governance...... 23 Risk Management ...... 35 Environment & Social Responsibility Report...... 39 Annual Report of the Directors on the Affairs of the Company ...... 42 Statement of Directors’ Responsibilities...... 45 Related Party Transactions Review Committee Report...... 46 Audit Committee Report...... 47 Independent Auditors’ Report...... 50 Statement of Profit or Loss...... 54 Statement of Comprehensive Income...... 55 Statement of Financial Position...... 56 Statement of Changes in Equity...... 57 Statement of Cash Flows...... 58 Notes to the Financial Statements ...... 59 Information to Shareholders...... 98 Five Year Financial Summary and Key Indicators...... 100 Notice of Meeting...... 102 Form of Proxy...... 103 Corporate Structure...... IBC 5 The Kingsbury PLC OPERATIONAL HIGHLIGHTS
Here at The Kingsbury, the numerous awards and accolades we receive year on year, and our consistent operational performance are testament to our achievement in the field of hospitality. Occupancy 64%
Composition of Corporate & Leisure Guests
40% No of Guest 60%
World Luxury Restaurant World Luxury Restaurant World Luxury Restaurant 56,313 Awards Awards Awards “Harbour Court” “Harbour Court” “The Ocean Seafood Corporate Eclecic/ International Luxury Hotel Restaurant Restaurant” Leisure Guests Cusine Country Winner Luxury Seafood Regional Winner South Sri Lanka Restaurant West Asia Regional Winner South West Asia Composition of Food & Beverage Covers
73% Food and Beverage Municipal Council of Colombo High achievement award for Excellence in Sustainability Culinary Services for Chef Kithsiri Silva (2017) 27% 706,499 High achievement award for Excellence in Hotel Housekeeping for Mr. Daminda Jayawardena (2017) Best hotel in Food Safety Excellence award (2017) Outlet Banquets
6 Annual Report 2017/18 FINANCIAL HIGHLIGHTS
During the year despite intense competition, The Kingsbury maintained its performance, continuing to prove our worth in a complex business environment.
Year ended 31 March 2018 2017 Change Revenue Rs. Mn % 13/14 2,143 Earnings Highlights and Ratios 14/15 2,336 Revenue (Rs. '000) 2,986,492 2,964,822 1 15/16 2,616 Earnings Before Interest & Tax (EBIT) (Rs. '000) 277,842 559,645 (50) 16/17 2,965 Profit Before Tax (PBT) (Rs. '000) 187,929 425,016 (56) 17/18 2,986 Profit After Tax (PAT) (Rs. '000) 139,154 380,346 (63) Earnings Per Share (Basic) (Rs.) 0.58 1.57 (63) Return on Capital Employed % 6.12 11.88 (48) Return on Assets % 4.14 9.02 (54) Net Profit Gross Profit Margin % 48.70 53.69 (9) Rs. Mn 13/14 32 Financial Position Highlights and Ratios 14/15 291 Shareholders Fund (Rs. '000) 2,533,880 2,390,553 6 15/16 293 Total Assets (Rs. '000) 4,536,467 4,710,701 (4) 16/17 380 Total Debt (Rs. '000) 1,257,972 1,510,856 17 17/18 139 Return on Equity % 7.42 17.78 (58) Gearing % 32.70 37.96 (14) Debt/Equity % 49.65 63.20 (21) Net Assets Per Share (Rs.) 10.47 9.88 6 Shareholders funds and Quick Asset Ratio No. of Times 0.45 0.66 (32) Market Capitalisation Rs. Mn Equity Asset Ratio No. of Times 0.56 0.51 10 13/14 1,671 Current Ratio No. of Times 0.51 0.73 (30) 3,098 1,963 14/15 3,872 2,182 Market/Shareholder Information 15/16 3,630 2,391 Market Value ( Year ended) (Rs.) 18.00 15.50 16 16/17 3,751 Market Capitalisation (Rs. '000) 4,356,000 3,751,000 16 2,534 17/18 4,356 Price Earnings Ratio No. of Times 31.30 9.86 >100 Shareholders Funds Market Capitalisation 7 The Kingsbury PLC FIVE YEARS AT A GLANCE
In as little as five years of operation, The Kingsbury has made strides in the hospitality industry, establishing itself as an icon over time. The hotel has become an essential part of the city skyline, bringing true meaning to our ethos: forever timeless.
A timeless icon of excellence Situated at the heart of the Our people, our greatest asset commercial capital
Winning global acclaim A trendsetter in the hospitality industry
8 Annual Report 2017/18
A lasting commitment to the people Sumptuous eclectic cuisine An enduring future
Luxurious accommodation and A unique sense of elegance and timeless grandeur sophistication
9 The Kingsbury PLC CHAIRMAN’S MESSAGE
We are proud to have achieved all this and more by concentrating on our core differentiators of luxurious facilities and excellent customer services which ensure that we stand out from the rest.
A. M. Pandithage Chairman 10 Annual Report 2017/18
Dear Shareholder, We consider the year under review expected to be operational by the second We consider the year I am pleased to present the Annual to be a year of consolidation, where quarter of 2018/19 and is expected to we focussed on efficiency and cost position Colombo as an entertainment under review to be a Report and the Financial Statements for year of consolidation, the year ended 31st March 2018. management without compromising hub in the South Asian region. We our high levels of customer services also refurbished the poolside area and where we focussed The end of the financial year 2017/18 and facilities including the provision of restaurant and rebranded it as the Honey on efficiency and cost also saw five years of successful luxurious amenities for our guests. The Beach Club to cater to a new market management without operations of the Kingsbury Hotel post main aim of the year was to drive sales segment. rebranding amidst ever challenging and increase occupancy levels which fell compromising our market conditions. We have become below that of expectations. While, the Kingsbury continued to receive high high levels of customer synonymous with providing our guests tourist arrivals growth was restricted ratings from online sites such as Trip services. unparalleled luxury and an exceptional to 3.2% in 2017, which negatively Advisor and were reviewed positively service leading to being recognised as a impacted Colombo-based 5-star hotels. by our guests. Further, the Hotel also under review. Attracting guests from foremost hospitality brand in Sri Lanka. This is due to emerging competition received many awards for our services, other regions of the world such as the The Kingsbury Hotel has received many in the non-graded accommodation. To quality F&B and housekeeping during Middle East for both leisure and business awards from recognised international, further accelerate this situation, the the year under review as showcased on as well as for special events through regional and local awarding bodies for Hotel was also affected negatively in page 6 of this annual report. MICE shall be areas which the Hotel will our service offering and accolades for terms of occupancy from country-specific continue to focus on in the coming years. Market Opportunities our sustainable hotel practices, high- conditions such as the partial closure of levels of housekeeping and food safety the Bandaranaike International Airport The Hotel continues to attract tourists Another critical area that the Hotel standards. As a hotel which operates (BIA), the breakout of the Dengue from our traditional markets of China, focused on during the year under review in a competitive environment, in the epidemic in the first quarter of 2017/18, India and Europe, while we also have is increasing our online presence by 5-star category in Colombo, we are proud which all contributed to the negative increased the focus on developing and undertaking more focussed and relevant to have achieved all this and more by view of Sri Lanka in the global market. gaining a foothold from new markets social media and digital marketing. This concentrating on our core differentiators such as Australia. Accordingly, the is an area that is of utmost importance of luxurious facilities and excellent Achievements for the Year Hotel’s guest arrivals showcased 49% for a business such as ours which customer services which ensure that we To overcome these challenges from the from China, India and Europe, while increasingly depend on the digital world stand out from the rest. external operating environment, the we saw 51% from other markets such to obtain guest bookings and reviews. Kingsbury Hotel in the year under review as Australia, United Kingdom, USA and Also as tourists and business travellers Operating Environment entered into an agreement with CÉ LA VI Canada. The Kingsbury also continues are increasingly becoming digitally savvy The year 2017/18 was in its entirety a a renowned evening entertainment to be focussed on the MICE segment and and turn to the convenience offered by lacklustre year from an economic growth brand from Singapore whereby we would successfully conducted over 1250 events the internet and social media references, perspective, which also was reflected in be re-branding our rooftop “Sky Lounge” such as conferences, weddings, seminars focus in these areas have become utmost the Hotel’s business operations. to CÉ LA VI Colombo. This facility is and corporate events during the year important. 11 The Kingsbury PLC
CHAIRMAN’S MESSAGE
Financial Performance The Kingsbury Hotel Last but not the least, our clientele who From a financial perspective the Hotel’s in the year under has been patronizing our hotel from performance during the year under across the globe and guests who plan review was below expectations. The review entered into an to visit our hotel, we look forward to intense competition together with agreement with CÉ LA VI welcoming you. the increase in cost impacted the a renowned evening performance of the Hotel. The decline in room sales, has had a negative impact entertainment brand on profitability, which reduced to from Singapore Rs.139 Mn. The key reason for these are A. M. Pandithage elaborated in the ‘operating environment’ in the digital marketing sphere. We are Chairman section. also in discussion with strategic partners to increase MICE events. Innovative Another aspect which negatively MICE events and strategic partnerships impacted the Hotel’s profitability was all place Kingsbury in a position to the performance of the Hotel’s luxury capitalise on opportunities in the coming serviced apartment complex located years. However, the thrust of the growth in Colombo 3. Known as Kingsbury is dependent on improved economic Residencies, the 40 luxury apartments and market conditions in the country. that was managed by Kingsbury Furthermore, it is envisaged in the long performed below expected levels. term the proximity of Kingsbury to the new Port City Development will also The Food and Beverage (F&B) sales bring in many strategic opportunities. only showed a marginal increase of 8% compared to the previous year. Acknowledgments
Future Outlook We take this opportunity to thank our colleagues on the Board for their valuable We are confident that in the year 2018, inputs to the Board’s deliberations. Our the hotel would fare well due to increase sincere appreciation to the Management marketing efforts penetrating into new Team and the staff at all levels for their markets along with enhance presence dedication and hard work.
12 Annual Report 2017/18
13 The Kingsbury PLC MANAGING DIRECTOR’S REVIEW
To maintain and grow the Kingsbury brand image further through differentiation making no compromise in quality and standards.
The Company is pro active; plans ahead, grabs opportunities and hedges against any threats or risks.
L. T. Samarawickrama Managing Director 14 Annual Report 2017/18
The financial year 2017/18 was Therefore over 70% of the listed Another example is the decision in We have not cut corners unfortunately an anticlimax for the inventory is actually informal and 2017 to terminate SriLankan Airlines’ city tourism sector. Despite high unregistered homestays, guest-houses European routes. This has effectively despite lower incomes. I expectations, we closed the year with the etc. This sector is a low cost alternative, cut-off easy access to Sri Lanka from believe this is the reason entire city-hotel landscape recording a not only for leisure travellers but also for many traditional European tourist source downturn. However, on a positive note, business-MICE travellers. They provide destinations. Given the option of high- for sustained growth in The Kingsbury has remained true to its minimum services at an extremely low quality service, a direct flight, and the F&B revenues, despite brand values and continued to invest in rate compared to formal star-class hotels option of changing flights and transiting the many new dining brand equity, five star quality and future as they are not burdened with minimum in uncomfortable airport conditions, brand value. We have also commenced room rates, central government and a large share of European visitors options that came into exciting new projects to generate municipal taxes, health and safety would have opted for a more accessible the market during the sustained business and financial growth expenses and employee welfare costs. destination, on a more comfortable travel over the short to medium term. route. The shut down of the airport in year. People continue What could be observed in 2017/18, the last quarter of 2017, natural disasters to patronise us for Operating Environment and the was the growing trend of tourists during the year and travel warnings due the quality of service City Hotel Sector being diverted to such low cost to dengue outbreaks, also discouraged Although the country experienced accommodations. Therefore, the formal arrivals. In addition, the overall lower and the overall dining relatively healthy growth in tourism city hotel sector did not benefit from the level of economic activity in the country experience. numbers, this growth did not translate inflows – not even from traditional MICE reduced business and investment related into a payoff for the city hotel sector. visitors, who previously preferred city visitors. The Kingsbury faced many hotels for convenience. These travellers booking cancellations during the year Due to these reasons, the city hotel sector are also being effectively diverted due to a combination of these reasons. To begin with, the entire competitive experienced lower room revenues and towards informal options through landscape changed dramatically in lower occupancy on average during online booking platforms that offer wide The city hotels were also slapped with 2017/18, with new competition coming 2017/18, despite growth in tourist ranging cost alternatives. a stringent minimum rate. While in at star-class level. However, the real arrivals. threat is not from star class and luxury this makes perfect sense in a room- Unfortunately, national policy decisions undersupply situation, it is detrimental brands. It is the rapidly multiplying Meanwhile, our costs continued to spiral have not been well thought out to in a room-oversupply situation, because informal sector within the city and city upwards during the year eating into strengthen the overall, tourism industry. we no longer have pricing flexibility outskirts. the bottomline. The cost of food and A case in point, is the focus in recent to compete against low cost options. imported items have escalated due to years towards emerging markets, such Because of the higher room rates within To put this comment into perspective, rupee depreciation. As a result, while our as India and China. While these markets the city, tour operators used hotels in major online booking websites have revenues declined, our costs increased. a room inventory in the range of have great potential, the actual arrivals the periphery to lodge their clients and around 90,000 for the whole of Sri are not interested in city nightlife and brought them into Colombo for day trips, Lanka. However, there are only 24,000 luxury accommodation. instead of booking them into the city registered rooms in the formal sector. hotels directly. 15 The Kingsbury PLC
MANAGING DIRECTOR’S REVIEW
Financial Performance occupancy and also the fixed rental commissions have now increased from and has performed extremely well On an average estimate, the city hotel charges, which could not be waived on about 12% to 20%. We also paid a despite the competition. In addition, sector has experienced a revenue decline the basis of lower occupancy. As a result, management fee and a marketing fee of we also enjoyed a fairly good year for of about 40%, compared to the previous this business made a net loss of Rs. 137.5 Mn to our parent Hayleys, and events, such as weddings and parties, and financial year. As I explained, this was Rs. 62.5 Mn. its subsidiaries. we also have a pipeline of bookings for primarily due to lower occupancy levels. events extending into the new financial In total, The Kingsbury market share is Due to both the residencies and the hotel Despite the lower profits, we have not cut year. Therefore, I am confident our F&B 229 rooms at The Kingsbury Hotel, and underperforming, the overall after tax back on regular and proper maintenance revenues will continue to grow. 40 apartments on a rental agreement at profit declined from Rs. 425 Mn in the of the property. While these capital Kingsbury Residencies. previous financial year to Rs. 187 Mn in investments have increased overall costs, As a core component of brand image, the current year. I believe they have also retained, and we have continued to invest in our Room revenues of The Kingsbury Hotel have even augmented, the overall value international standard of quality declined by 6% to Rs. 1.30 Bn, from The primary reason for the much lower of the property as the primary physical systems, to ensure customer health Rs. 1.39 Bn, and other revenues fell by bottomline this year, is the significant asset of the Company. and safety, and occupational health 4% to Rs 83.1 Mn. However, we were loss from hotel accommodation, and safety are maintained/improved. able to maintain total hotel revenues rather than the lower apartment In addition, we have managed our We also continued to invest in training due to strong growth in F&B revenues. accommodation. This is due to hotel cashflows prudently and we have and development. During the year we Our F&B revenues increased by 8% to Rs room accommodation representing as continued to service our debts to reduce contracted Angliss to provide on-the-job 1.59 Bn during the year, and as a result, much as 76% to 80% of Gross Operating our gearing from 37.96 to 32.70. Hence, training to add value to the customer our total revenue loss from the hotel Income (GOI), whereby any decline in despite lower profitability the Company experience from start to finish. was contained to 1%, from Rs. 3.08 Bn this segment has a disproportionate is financially stable and has a strong asset in 2016/17, to Rs. 3.06 Bn in the current impact on bottom line. base. In the current environment of rising financial year. competition, marketing is no longer an With regards to the overall higher cost Operations Overview option. During the year, we engaged with However, due to cost of sales increasing structures of the Kingsbury Hotel, I The Kingsbury continued to maintain the market through traditional channels by 11% the gross profit of the hotel would like to note that baseline cost its standards in line with the Kingsbury and also online digital platforms. We declined by 9% to Rs. 1.45 Bn, from items have increased dramatically. For brand image. We have not cut corners also attended all major travel fairs in Rs. 1.59 Bn. Both administrative and instance, food costs represented about despite lower incomes. I believe this is European markets including the UK, marketing expenses increased, which 43% of costs in the current financial year, the reason for sustained growth in F&B Germany, France, Italy and Spain and resulted in a 56% decline in the profit compared to about 41% in the previous revenues, despite the many new dining other markets. before tax. With a 15% increase in taxes, year, which translates into a cost increase options that came into the market during the profit after tax from the hotel fell by a of about Rs. 45 Mn. This is excluding the year. People continue to patronise us Growth Strategy and Outlook drastic 63% to Rs. 139.1 Mn, from the cost increases associated with for the quality of service and the overall Our priority in the new financial year Rs. 380.3 Mn in the previous year. online booking platforms, maintenance dining experience. is to increase occupancy and room and labour. Staff costs for instance revenues, and to revert to profit levels Meanwhile, the Kingsbury residencies, increased by 17% to Rs. 484.4 Mn, from The Honey Beach Club, which is a Bali of the previous year, while improving did not do well either, again due to lower Rs. 413.5 Mn and Online Travel Agency concept, was launched during the year our standards even further. We will 16 Annual Report 2017/18
also change our marketing strategies at the back of the car park, which will Appreciations to enhance brand visibility and market be integrated with the hotel. This will I would like to extend my appreciations presence. add 60 apartments and 200 rooms to the Chairman and the Board for to our current inventory and will be their guidance and advise during a The Kingsbury customer value ideally situated to cater to the Port-City difficult year. I am also grateful to proposition will be further enhanced in next door. The bore-holes have already the management and staff for their the new financial year by adding to our been dug and the project is targeted for contributions and I am thankful to our portfolio. We have already partnered completion in about two and a half years, customers for their patronage. We hope with the Singaporean company CÉ LA VI, by end 2021. to make your Kingsbury experience even to operate the Kingsbury entertainment better in the new financial year. hub which will be known as In terms of outlook for the new financial CÉ LA VI Colombo. This is a revamp and year, I am hopeful of a recovery. Already, Sincerely refurbishment of the Sky Lounge. A new in April 2018 we are seeing some Japanese restaurant is also on the cards. improvement in our B-on-B figures, compared to some months of the With large volumes of low cost rooms previous year. coming into the market, the average L. T. Samarawickrama room rates within Colombo city, have However, it must be stressed that Managing Director reduced from USD 250 per night, to the Sri Lanka has to be promoted as a range of USD 165 to USD 175. In this destination and the national authorities scenario, we are considering downsizing must do their part. During the 2017/18 options to provide more competitively financial year many plans went into priced accommodation, by delinking limbo, including the digital marketing the Residencies from the Kingsbury platform and the worldwide advertising brand and providing a different level of campaign. Nevertheless, the industry facilities at a lower rate. continues to subscribe to the Tourism Development Levy. We also need to look Over the medium term, we are also at improving travel facilities including looking into expansion options. We access roads to ensure easy travelling believe growth requires enhanced within the country. Unless some serious room capacity to capitalise on emerging policy changes are implemented, the opportunities from development tourism industry cannot grow as an projects, such as the Port City. Therefore, inclusive whole, to create value for the to enhance room capacity, we are entire economy. Therefore, I hope we see building our own apartment complex some positive action at national level, in the new financial year.
17 The Kingsbury PLC BOARD OF DIRECTORS
A. M. PANDITHAGE Executive Director of Vallibel Finance S. C. GANEGODA * senior management experience in the Chairman PLC and serves on the Boards of Amaya Mr. Ganegoda rejoined Hayleys in Hotel industry. He is responsible for the Leisure PLC, Haycarb PLC, Hayleys March 2007. Appointed to the Group Aviation sector, Hotel Development, Mr. Pandithage joined Hayleys Group Fabric PLC, Dipped Products PLC, and Management Committee in 2007. Construction Management, Aluminium in 1969. Appointed to the Board in Hayleys Global Beverages (Pvt) Limited. Appointed to the Board in September Fabrication and Interior Fit-Out 1998. Chairman & Chief Executive of 2009. Fellow Member of Institute of Businesses of the Group. Hayleys PLC since July 2009. Fellow of L. T. SAMARAWICKRAMA Chartered Accountants of Sri Lanka the Chartered Institute of Logistics and (Managing Director) and Member of Institute of Certified L. N. DE S. WIJEYERATNE ** Transport (UK). Honorary Consul of Management Accountants of Australia. Mr. Wijeyeratne is a fellow of The United Mexican States (Mexico) to Sri Mr. Samarawickrama is an Holds an MBA from the Postgraduate Institute of Chartered Accountants in Lanka. Committee Member of the Ceylon internationally qualified Hotelier Institute of Management, University Sri Lanka and counts over thirty-five Chamber of Commerce. Council Member having gained most of his Management of Sri Jayewardenepura. Worked for years of experience in Finance and of the Employers’ Federation of Ceylon. experience in UK, working for large Hayleys Group between 1987 and 2002, General Management both in Sri Lanka Member of the Advisory Council of the international hotel chains over a long ultimately as an Executive Director. and overseas. He was the former Group Ceylon Association of Ships’ Agents. period of time. The first Sri Lankan Subsequently, held several senior Finance Director of Richard Pieris Manager to be appointed by the Beaufort management positions in large private PLC and also held senior management International Chain of Hotels to run the DHAMMIKA PERERA * sector entities in Sri Lanka and overseas. positions at Aitken Spence & Company, first seaside boutique resort. (Co-Chairman - Non-Executive) Has responsibility for the Strategic Brooke Bonds Ceylon Ltd. and Zambia Business Development Unit and the Consolidated Copper Mines Limited. Mr. Dammika Perera is the quintessential He is a member of the Institute of Fentons Group. strategist and business specialist with Hospitality, UK (formerly HCIMA) and Mr. Wijeyeratne is a member of the interests in a variety of key industries of the Royal Society of Health, London. S. J. WIJESINGHE * Quality Assurance Board and the including Manufacturing, Banking and He has many years of experience in Corporate Governance Committee of Finance, Hospitality and Hydropower the trade, having specialised in Hotel Mr. Wijesinghe joined the Group in the Institute of Chartered Accountants generation. He has nearly thirty years designs and development, he has been 2008 and was appointed to the Group of Sri Lanka and was a former member of experience in building formidable responsible for the careful planning Management Committee in 2011. of the Sri Lanka Accounting Standards businesses through unmatched strategic and execution of Amaya Resorts & Currently serves as Managing Director of Monitoring Board. He is presently foresight. Spas refurbishment and rehabilitation Travels, Aviation & Projects and Alufab an Independent Director and Audit programs. PLC and Executive Director of S&T Committee Chairman of several listed Mr. Perera is the Chairman of Vallibel Interiors (Pvt) Ltd. He holds an MBA entities. One PLC, Royal Ceramics Lanka PLC, N. J. DE S. DEVA-ADITYA ** from the University of Leicester (UK) and Lanka Ceramic PLC, Lanka Tiles PLC, is a Member of the Chartered Institute Mr. Deva-Aditya was the First Asian Lanka Walltiles PLC, The Fortress of Marketing (UK). Holds over 30 years’ MP elected to Conservative Party in Resorts PLC, Vallibel Power Erathna PLC, experience in the Aviation industry. Prior the House of Commons and Bachelor Delmege Limited, and LB Microfinance to joining Hayleys, held several senior Technology (Honours) Upper Second, Myanmar Company Limited. He is the positions at SriLankan Airlines including Aeronautical Engineering and Design, Co-Chairman of Hayleys PLC, Singer (Sri management positions in Europe, Middle Research Fellow, University of Lanka) PLC, Executive Deputy Chairman East, the Far East and the Head Office Louhborough, Graduate of the Royal of LB Finance PLC and Deputy Chairman in Colombo and was also a member of Aeronautical Society and Institute of of Horana Plantations PLC. He is also the the Group Senior Management Team Mechanical Engineers and he holds of the Airline. Possesses over 5 years’ directorships in six companies. 18 Annual Report 2017/18
MS. R. N. PONNAMBALAM ** He is a Certified Hotel Trainer with the MS. I. JAMALDEEN ** well as an MBA from the International Ms. Ponnambalam has held several Chamber of Commerce for Munich and Ms. Isabel Jamaldeen has extensive University of Applied Sciences in Bad senior management positions in large Upper Bavaria and also a graduate of experience in the hospitality industry, Honnef, Germany. private sector entities. the Technical University of Munich. He previously leading all corporate events is presently a Director of Hunas Falls for Bloomberg in London. Her main MS. A. A. K. AMARASINGHE * She has served as a Director of Mclarens Hotels PLC. focus was the planning and execution of (Alternate Director to Mr. Dhammika Holdings Limited & GAC Shipping high profile events for leaders in politics Perera) Limited. She currently serves as Director D. E. SILVA and finance. Prior to Bloomberg, Ms. Kawshi Amarasinghe has been of Amaya Leisure PLC, Alliance Finance Mr. Silva is a Fellow Graduate Member Ms. Jamaldeen worked as an events appointed as the Alternate Director to Co. PLC, Mcbolon Polymer (Pvt) Ltd. and from the Ceylon Hotel School and manager for Mint, one of London’s most Mr. Dhammika Perera with effect from Pidilite Lanka (Pvt) Ltd. the School of Tourism (FCHSGA), in renowned events and catering business, 15th March 2017. Hotel and Catering Operations with a focusing on high profile events in and She is presently the Managing Director of specialisation in Front Office Operations. around London. Ms. Amarasinghe currently serves as Macbertan (Pvt) Ltd. She has also been in He was awarded the Management the Assistant Manager of International roles of international and local business Diploma in Hotel and Catering Furthermore, Ms. Jamaldeen has a Business Development & CSR at Vallibel development and negotiation. Operations with a second class Upper track record of working in various One PLC. She holds a Bachelor’s Degree Division. He is a member of the Institute departments of leading hotels in International Studies from the Ms. Ponnambalam was appointed as a of Hospitality (UK), Director of Amaya throughout Europe. There she developed University of Queensland, Australia Founder Member of the Commonwealth Leisure PLC, The Fortress Resorts PLC, extensive knowledge of the overall and Certificate in Hotel Revenue Business Women’s Leadership Group (Sri Maalu Maalu Resorts & Spa, Hunas Falls operational aspects of the hotel business. Management from the Cornell University, Lanka) on 13th November 2013. Hotels PLC, The Sun Tan Beach Resorts Ms. Jamaldeen is the founder of Gem USA. Ltd. and Delair Travel (Pvt) Ltd. Presently Atelier London, an online jewelery She also currently serves as a Board serves as Director / Head of Marketing & business that mainly sells to the Member and Jt. Secretary of Women’s Sales for Amaya Resorts & Spas and The European market. She has also developed Chamber of Industry & Commerce. Kingsbury Hotel Colombo. an exclusive jewelery business focusing on bespoke pieces for high profile clients. J. P. VAN TWEST ** He counts over 22 years of experience in the Hospitality Industry, specialising in Ms. Jamaldeen is the Managing Director Mr. Van Twest currently serves as the Marketing and Sales. of W15 and W15 Escape, two beautiful Director / General Manager of The boutique properties in Weligama and Fortress PLC. He counts over 35 years A Board Member of SLTPB (Sri Ahangama, located on the southern coast experience in the hospitality industry Lanka Tourism Promotion Bureau), of Sri Lanka. in senior management positions in Sri Vice President of THASL (The Hotel Lanka, Europe, Australia and the South Association of Sri Lanka), Chairman of Ms. Jamaldeen has a very strong Pacific. Marketing Committee of the Conventions background in the hospitality industry Bureau, The Vice Chairman of PATA with a Diploma in Hotel Operations and Graduated from the Ceylon Hotel (Pacific Asia Travel Association), and is Management from Glion Hotel School School, Sri Lanka in Hotel & Catering Executive Director the Immediate Past President of TTSC in Switzerland. She holds a Bachelor of Operations and Advanced Hotel and * Non - Executive Director (Travel Trade Sports Club). Mr. Silva is an Business from Victoria University of Catering Operations from the Carl ** Independent Non - Executive Director All Island Justice of Peace. Technology in Melbourne, Australia as Duisburg Centre in Munich, Germany. 19 The Kingsbury PLC SPLENDOUR
Discover the true meaning of elegance, grace and splendour at The Kingsbury, where we bring you regal indulgence, outstanding individual comforts and the best service amongst hotels in Colombo.
Our 229 rooms and apartments are expertly designed with every luxury in mind.
20 Annual Report 2017/18
21 The Kingsbury PLC GRANDEUR
Comprising the very best of bars and restaurants in Colombo, The Kingsbury offers grandeur extravagance and unparalleled dining experiences. Serving exotic dishes from around the world, you will be spoilt for choice. Embark on a culinary adventure whether you wish to savour local delights at Harbour Court or taste the wonders of the sea at The Ocean Seafood Restaurant.
22 Annual Report 2017/18 CORPORATE GOVERNANCE
The Board profiles reflect the caliber of members and the weight their views carry in Board deliberations. The Board seeks individuals with independence based on their proven capabilities and their potential to contribute to the company.
The Company believes Corporate The Constituents of Our Governance is an essential part of a Governance Practice culture that enables us to meet our Enterprise Governance constitutes the short-term objectives while striving to entire accountability framework of our realise the long-term vision of the hotel organisation through the two dimensions and the Hayleys Group. Good Corporate of conformance and performance that Governance ensures that the Company are in balance. Whilst conformance is run as efficiently as possible in the covers issues such as Board structures interests of its stakeholders. This in turn and roles and Executive Remuneration, promotes greater confidence within the the performance dimension focuses company as well as amongst the public on strategy and value creation. The at large. focus is on helping the Board to make strategic decisions and understanding Our goal has therefore been to foster a the gamut of risk and the key drivers culture of good governance, recognising of performance. Recognising that that it is the key to sustainability and performance does not lend itself easily integrity of the hotel and central to to a regime of standards and audit, we the health of our economies and their have developed a range of best practice stability. tools and techniques that can be applied intelligently within different areas of the organisation.
We account the successful infusion of conformance and performance measures to a conscious decision to take good
23 The Kingsbury PLC
CORPORATE GOVERNANCE
Governance seriously, recognising it as The Corporate Governance practice Code of Best Practices on A balance of Executive and Non- imperative as opposed to requirements adopted by the Company is in line with Corporate Governance Executive member representation on the of formal codes of practice. Conformance the Code of Best Practice on Corporate Board ensures impartiality. A.1 Board of Directors: and performance measures are not Governance issued by the Institute of The Board is responsible to the merely viewed as “policing” tools but as Chartered Accountants of Sri Lanka and The Board of The Kingsbury PLC Company’s shareholders for the success an avenue for us as a corporate to work the Listing Rules of the Colombo Stock comprises of eleven Directors. An of the entity and for its overall Strategic better and yield better. Exchange. The Corporate Governance Executive Chairman, a Non-Executive Co- Direction, Values, and Governance. Principles, along with the Charters Chairman, two Executive Directors and The Board is responsible for the The Foundation of Our of each of the Board Committees and seven Non-Executive Directors of which overall system of internal control for Governance Practice the by-laws of the Board provide the five are Independent. The names of the the Company and its subsidiaries and framework for Corporate Governance at Directors and their profiles are available The Kingsbury PLC is committed to the for reviewing the effectiveness of the The Kingsbury PLC. on page 18 of this report. highest level of Governance and makes system. It carries out such a review at every effort to cultivate a culture that least annually, covering all material values and rewards exemplary ethical A.1.1 Board Meetings: controls including financial, operational All meetings of the Board and its standards, personal and corporate and compliance controls and risk integrity, and respect for others. subcommittees were well attended management systems, reporting to during the year. All Board members have shareholders that it has done so. The very premise of our Governance specific responsibilities in controlling practice, the foundation upon which it and setting direction through the various is based and nurtured, is by way of our Board Committees. commitment to the corporate values and the Code of Conduct prevalent within our holding company, the Hayleys Group. Governance Structure As with our holding company, The Kingsbury PLC has a firm commitment Shareholders to transparency and integrity in our Corporate Governance practices. Nomination Committee External Auditor
As such, The Board of Directors, Senior Annual General Meeting Management, and Employees are expected to strictly adhere and follow in Remuneration Committee performing official duties, ensuring that the Group image remains at the highest Board of Directors Audit Committee levels. Related Party Transactions Review Committee Corporate Management Internal Audit and Team Assurance 24 Annual Report 2017/18
The Board meets quarterly as a practice The following information were reported A.1.2 The Boards’ Responsibilities can The ultimate responsibility of the and ad hoc meetings are held whenever and discussed at length at the board be broadly listed as follows: Company’s financial performance necessary. During the financial year meetings held during the year. • Enhancing shareholder value, lies with its Board of Directors and under review, the Board met on four formulating, communicating, is in control of the Company’s affairs occasions. • Finances and operational results, implementing, and monitoring of and conscious of its obligation to all monthly and quarterly against the business policies and strategies. stakeholders. The attendance of these meetings is given previous year results. below: • Ensuring due compliance with A.1.3 Act in accordance with Laws: • Budgets and targets for the coming applicable legal, ethical, health, The Board has set in place a framework month and quarter. environment, and safety standards of policies, procedures, and a risk • Internal Control breaches or frauds and regulations. management framework to ensure during the period and actions taken. • Ensuring that due attention is given compliance with relevant laws, and to appropriate accounting policies international best practice with regards to the operations of the Group. Directors Name of Director Executive/Non- Attendance and practices and to setting priorities have the power to obtain independent Executive/Independent and communicating values and professional advice as deemed necessary Non-Executive ethical standards for management. and these functions are co-ordinated by • Ensuring that appropriate systems the Group Legal Department or Group Mr. A. M. Pandithage - Chairman Executive 04/04 of internal controls are in place to Finance, as and when it is necessary. Mr. Dhammika Perera * - Co-Chairman Non-Executive Please refer the safeguard the assets of the Company. note below • Reviewing and approving annual A.1.4 Company Secretary: Mr. L. T. Samarawickrama - Managing Executive 04/04 budgets and periodic monitoring of The service and advice of the Company Director performance against the budgets. Secretary are made available to Directors Mr. N. J. De S. Deva-Aditya ** Independent Non-Executive 00/04 as necessary. The Company Secretary • Approving of major investments on Mr. S. C. Ganegoda * Non-Executive 03/04 keeps the Board informed of new laws, business proposals and adopting regulations and requirements coming Mr. S. J. Wijesinghe * Non-Executive 02/04 annual and interim Financial into effect, which are relevant to them as Mr. L. N. De S. Wijeyeratne ** Independent Non-Executive 04/04 Statements prior to publication. individual Directors and collectively to Ms. R. N. Ponnambalam ** Independent Non-Executive 03/04 • Evaluating and monitoring the the Board. Mr. J. P. Van Twest ** Independent Non-Executive 02/04 performance of the Company on a The Company has obtained appropriate Mr. D. E. Silva Executive 03/04 regular basis and initiating remedial action where necessary. insurance covers and it is further detail Ms. I. Jamaldeen Independent Non-Executive 02/04 in page 43 under “Annual Report of Ms. A. A. K. Amarasinghe Non-Executive 04/04 • Adopting annual and interim The Directors on The Affairs of The (Alternate Director to Mr. Dhammika Perera ) accounts and recommending Company”. dividend for approval by the Note: Mr. Dhammika Perera was represented by his Alternate Director Ms. A. A. K. Amarasinghe in 04 Board shareholders. Meetings. 25 The Kingsbury PLC
CORPORATE GOVERNANCE
A.1.5 Independent Judgment: A.1.6 Dedicate adequate time and are ascertained; and that the board is Corporate Governance The Board determines the degree of effort to matters of the Board and in complete control of the Company’s independence of each member, based Company: affairs and alert to its obligations to all is the key element in on criteria such as independence of The Directors are provided with minutes, shareholders and other stakeholders. The improving organisational character and judgment, and assessment the agenda, and the board papers giving Chairman maintains close contact with of relationships or circumstances that them adequate time to study the contents all Directors and, where necessary, holds performance, affect or are likely to affect the Director’s prior to meetings. meetings with Non-Executive Directors sustainability as well as judgment. Independent Directors are without Executive Directors being enhancing stakeholders free of any business or other relationship A.1.7 Calling for Resolution: present. with the Company that can materially One third of the directors can call for a confidence. affect their performance on the Board resolution to be presented to the board A.4 Financial Acumen: towards this effect; Independent Board where they feel it is in the best interest to The Board includes two senior Chartered members make an annual determination the company to do. Accountants who possess the necessary The Board profiles reflect the calibre of of their independence through a signed knowledge and competence to offer the members and the weight their views and dated declaration to that effect. A.1.8 Training for Directors: Board guidance on matters of finance. carry in Board deliberations. The Board The Board regularly reviews and agrees seeks individuals with independence The Governance approach towards the on the training and development A.5 Board Balance: based on their proven capabilities and appointment of Alternate Directors needs of the Board members, to The composition of the Executive and their potential to contribute to the stipulates that any Alternate Director ensure Directors are fully able to make Non-Executive Directors (the latter are company. Non-Executive Board members appointed by a Non-Executive Director appropriate decisions with regard to the over one third of the total number of perform an important role in providing should not be an Executive of the current and future performance of the Directors) satisfies the requirements laid an external perspective to the business. Company, and an Alternate Director business. down in the Listing Rules of the Colombo The Independent Non-Executive appointed by an Independent Director Stock Exchange. Directors are free from any relationship should meet the criteria of Independence A.2 Division of Responsibilities that can interfere with the affairs of the laid out above. The Board gives direction between The Chairman and CEO: The balance of Executive and Company. to the long term strategy, seeking The positions of Chairman and Managing Non-Executive Directors on the Board and contributing views and opinions Director are kept separate in line with are essential in ensuring that decision The Board has determined that the on strategic options proposed by the good Governance practices making is transparent and not dominated Directors: Mr. N. J. De S. Deva-Aditya, Executive Management. All members by any individual or small group. Mr. L. N. De S. Wijeyeratne, Ms. R. N. of the Board have fiduciary duty and A.3 The Chairman’s Role: Ponnambalam, Mr. J. P. Van Twest and statutory liability, regardless of whether The Chairman is responsible for the As at 31st March 2018, the Board Ms. I. Jamaldeen satisfy the criteria for they are Executive or Non-Executive efficient conduct of Board meetings consisted of 11 Directors comprising of: ‘independence’ set out in the Listing and ensures effective participation Rules. of both Executive and Non-Executive 3 Executive Directors (ED) Directors. It is also the responsibility of 3 Non-Executive Directors (NED) The Board is of the opinion that the Chairman to ensure that views of 5 Independent Non-Executive Directors- Ms. I. Jamaldeen has the capability to Directors on issues under consideration (NED/ID) conduct herself in an Independent and 26 Annual Report 2017/18
Impartial manner on matters deliberated The Articles call for one third of the A.11 Appraisal of Chief Executive the Company within the Group and by the Board and her Independence will Directors in office to retire at each Officer: commensurate with each employee’s not be affected by her spouse Mr. M. H. Annual General Meeting. The Directors Prior to the commencement of each level of expertise and contributions, Jamaldeen being a Director of Hayleys who retire are those who have served financial year, the Board in consultation bearing in mind the business’s PLC, Haycarb PLC and Talawakelle Tea for the longest period after their with the Chief Executive Officer, set performance and shareholder returns. Estates PLC. appointment/re-appointment. Retiring reasonable financial and non-financial Directors are generally eligible for re- targets which are in line with short The Remuneration Committee comprises The Chairman of The Kingsbury PLC is election. The Managing Director does not medium and long term objectives of The the following Non- Executive Directors also the Chairman of Hayleys PLC. Chief retire by rotation. Kingsbury PLC, achievement of which and the Chairman of this committee is Executive Authority is vested in the should be ensured by the Chief Executive appointed by the Board. Managing Director of the Company and A.9 Appraisal of Board Performances: Officer. A monthly performance the distinction between the Chairman The Chairman and Remuneration evaluation is performed at which actual • Mr. L. N. De. S. Wijeyeratne and Officers wielding executive powers Committee is responsible for evaluating performance is compared to the budget. (Chairman) - Independent Non- in the Company ensures the balance of the performance of the Executive The Chief Executive Officer is responsible Executive Director Power and Authority. Directors. The Board undertakes an to provide the Board with explanations • Ms. R. N. Ponnambalam - annual self-evaluation of its own for any adverse variances together with Independent Non-Executive Director A.6 Supply of Information: performance and of its Committees and actions to be taken. Directors are provided with quarterly the responses are collated by the Board C Relations with Shareholders reports on performance and appropriate Secretary who compiles a report which is B.1 Directors’ Remuneration C.1 Constructive Use of the Annual documentation in advance of each Board submitted to the Chairman and discussed Procedure: General Meeting (AGM) and Conduct of meeting for individual directors to study at a Board Meeting. The Remuneration Committee General Meetings: matters under discussion. determines the framework and policy in The Annual General Meeting is A.10 Disclosure of Information in terms of engagement and remuneration considered by the Board of Directors as A.7 Appointments to The Board: Respect of Directors: of the Chairman, the Board of Directors, a means of continuing effective dialogue The Board as a whole decides on the Information specified in the Code with the Executive Management, and all with shareholders and encourages their appointment of Directors in accordance regards to Directors are disclosed within compensation structures. with the Articles of Association of the this Annual Report as follows: active participation. The Board offers Company. The Remuneration Committee of clarifications and responds to concerns • Name, qualifications, expertise, Hayleys PLC, the holding company of shareholders have over the content of the A.8 Re-Election of Directors: material business interests and brief The Kingsbury PLC is responsible for Annual Report as well as other matters, The provisions of the Company’s profiles on pages 18 to 19. laying down guidelines and parameters which are important to them. Articles require a Director appointed by for the compensation structures of all • Related party transactions on pages The adoption of the Annual Report of the Board to hold office until the next management staff within the Group. 91 to 92. the Board of Directors and the Financial Annual General Meeting and seek re- The Remuneration Committee of The Statements is considered as a separate appointment by the shareholders at that • Membership of sub-committees and Kingsbury PLC is guided to work within resolution. meeting. attendance at Board Meetings and the above given parameters and design Sub-Committee meetings on pages compensation levels appropriate for 25, 46, 47. 27 The Kingsbury PLC
CORPORATE GOVERNANCE
A copy of the Annual Report including Act no 07 of 2007 which materially affect • The “Independent Auditors’ Report Director, General Manager, and the Financial Statements, Notice of the the net asset base of Kingsbury PLC. “on page 50 for the Auditor’s Director Finance attend the meetings of Meeting and the Form of Proxy are sent responsibility. the Audit Committee by invitation. The to shareholders 15 days prior to the date D. Accountability and Audit Audit Committee has written terms of of the AGM as required by the Statute in D.1 Financial and Business Reporting D.2 Internal Controls: reference and is empowered to examine order to provide the opportunity to all (The Annual Report): The Board is responsible for the any matters relating to the financial the shareholders to attend the AGM. A The Board places great emphasis on Company’s internal controls and affairs of the Company and its Internal summary of the procedures governing complete disclosure of financial and its effectiveness. Internal control is and External Audits. voting at General Meeting is circulated non-financial information within the established with emphasis placed on to shareholders with every notice of the bounds of commercial reality and safeguarding assets, making available It helps the Company to strike the proper General Meeting. on the adoption of sound reporting accurate and timely information and balance between conformance and practices. Financial information is imposing greater discipline on decision performance. C.2 Communication with disclosed in accordance with the Sri making. It is important to state that any Shareholders: Lanka Accounting Standards. Revisions system can ensure only reasonable and Its key role, therefore, is to monitor the Shareholders are provided with the to existing Accounting Standards and not absolute assurance that errors and integrity of the Financial Statements of Annual Report and also with Quarterly adoption of new standards are carefully irregularities are prevented or detected the Company and review the same and Financial Statements via the Colombo monitored. within a reasonable time. where appropriate make representations Stock Exchange website, which the to the Board on business risks, company considers as its principal forum The Kingsbury PLC has complied with Holding company resources by way of internal controls and compliance. The for communication with stakeholders. the reporting requirements prescribed by the Hayleys Group’s Management Audit Committee is also responsible for the the Colombo Stock Exchange. and System Review Department are assessment of the External Auditors, Shareholders may voice concern or raise utilised in assessing the effectiveness their independence and quality of queries with the Chairman, Directors or The following specialised information and successful implementation of the work. Interacting with external and the Company Secretary as appropriate. requirements are also included in this existing controls and strengthening these internal auditors, the Committee The Company maintains an appropriate Annual Report: and establishing new controls where ensures that audits are carried out with dialogue and provides feedback and necessary. independence, integrity, and objectivity. interaction. • The Annual Report of the Board Close monitoring and control of type of Directors on the Affairs of the The Board has reviewed the effectiveness and value of non-audit work is carried C.3 Disclosure of Major and Material Company given on pages 42 to 44 of the System of financial controls for out to preserve the independence of the Transactions: cover all areas of this section. the period, up till the date of signing the external auditors. Transactions, if any, which materially Financials. affect the net asset base of The Kingsbury • The “Statement of Directors’ PLC, will be disclosed in the Quarterly / Responsibilities” is given on page 45. D.3 Audit Committee: Annual Financial Statements. During the • The Directors’ Statement on Internal The Audit Committee is chaired by year, there were no major transactions as Controls is given on page 28. Mr. L. N. De. S. Wijeyeratne, a Fellow defined by Section 185 of the Companies Member of the Institute of Chartered Accountants of Sri Lanka. The Managing 28 Annual Report 2017/18
The composition of the Audit Committee contributions, conflict of interest, Company. Shareholders are provided implemented a comprehensive IT is as follows: entertainment and gifts, insider dealing, an opportunity to comment, discuss policy which strengthens controls of the inside information and corporate and seek clarifications on any relevant organisation’s IT System and ensures Mr. L. N. De S. Wijeyeratne (Chairman) - opportunity, political contribution, issues with the Chairman and the Board unauthorised access and data loss is Independent Non-Executive Director money laundering and whistleblowing, of Directors at the Annual General prevented. the Code demands compliance at all Meeting. Further, shareholders are free to Ms. R. N. Ponnambalam - Independent levels through formal commitment from informally meet with the Directors at the Hayleys Group’s Disaster Recovery Non- Executive Director each and every employee. conclusion of general meetings. Policy ensures that daily backups are Mr. J. P. Van Twest - Independent Non- taken in a timely manner and stored in Executive Director The Code of Ethics defines the ethical The Institutional Investors are remote locations ensuring reduction of expectations from the team and most encouraged to give due weight on downtime and continuity of operations The Audit Committee report appears on importantly, constant and consistent matters relating to the Board structure during a disaster. page 47 of this report. reference to the Code inculcates these and composition to Board structure. The practices and principles continuously. Annual Report gives the shareholders H. Environment, Society, and D.4 Related Party Transactions Review A reward and recognition scheme in sufficient information on such related Governance (ESG): Committee: place serves as the main catalyst in matters which allows them to evaluate ESG policies and practices implemented The related party transactions review perpetuating the service values and same to develop long term sustainability of committee of the parent company the Code of Ethics. This programme the Company is discussed in this Annual Hayleys PLC acts on behalf of the recognises the achievements and F. Other Investors: Report page no; 39 under “Enviroment Company. The report of the Related Party dedication of the team made towards the Individual investors are encouraged & Social Responsibility Report” and Transactions Review Committee is given realisation of service excellence. to carry out adequate analysis or Corporate Governance (of which this in page no 46. seek independent advice in investing paragraph is part of ). D.6 Corporate Governance Disclosures: or divesting decisions. They are also D.5 Code of Governance and Business The Corporate Governance Report set encouraged to participate in General Conduct: out on pages 23 to 34 (of which this Meetings of companies and exercise Operating under the guidance of the paragraph is part of ) describes the extent their voting rights. Information is Hayley’s Group Code of Conduct, to which The Kingsbury PLCs’ adheres disseminated to all shareholders as the Company has been practicing an to established principles and practices of specified in the Stakeholder Engagement exemplary standard of business conduct. good Corporate Governance section on page 98. Clearly communicated to employees across the organisation, in a relevant and E. Institutional Investors: G. Internet of Things & Cyber Security: consistent manner, the Code of Conduct The Company conducts regular The Company has implemented a together with a Code of Ethics has been discussions with Institutional Investors. fully integrated property management embedded in the daily functioning of Existing and prospective investors and financial information IT system the organisation. Addressing issues such are given a balanced report that which has increased the effectiveness as bribery and corruption, charitable enables them to make well-informed and efficiency in the provision of decisions in their dealings with the management information, and has 29 The Kingsbury PLC
CORPORATE GOVERNANCE
Levels of compliance with the CSE’s Listing Rules - Section 7.10, Rules on Corporate Governance as at 31st March 2018 are given in the table that follows Rule No. Subject Applicable Requirement Compliance Details Status
7.10.1(a) Non-Executive Directors At least one third of the total number of Directors should be Compliant Eight out of the Eleven Directors are Non- Non-Executive Directors Executive Directors 7.10.2(a) Independent Directors Two or one third of Non-Executive Directors, whichever is Compliant Five out of the Eight Non-Executive Directors higher should be Independent are Independent Directors 7.10.2(b) Independent Directors Each Non-Executive Director should submit a declaration of Compliant Non-Executive Directors have submitted the Independence/Non-Independence in the prescribed format declarations as at 31.03.2018 7.10.3(a) Disclosure relating to Directors The Board shall annually make a determination as to the Compliant Please refer ‘Board of Directors’ on pages 18 independence or otherwise of the Non- Executive Directors to 19 and names of Independent Directors should be disclosed in the Annual Report 7.10.3(b) Disclosure relating to Directors The basis for the Board to determine a Director is Compliant Please refer page 26 under the heading Board Independent when the criteria specified for independence Balance is not met 7.10.3(c) Disclosure relating to Directors A brief resume of each Director should be included in the Compliant Please refer ‘Board of Directors’ on pages 18 Annual Report including areas of expertise to 19 7.10.3(d) Disclosure relating to Directors Forthwith provide a brief resume of new Directors Compliant A brief resume provided to the Exchange at appointed to the Board with details specified in 7.10.3(a), (b) the time of appointment is available on pages and (c) to the Exchange 18 to 19 7.10.5 Remuneration Committee A listed company shall have a Remuneration Committee Compliant Names of the members of the Remuneration Committee are stated on page 27 7.10.5(a) Composition of Remuneration Shall comprise of minimum of Two Independent Non- Compliant The Committee consists of Two Independent Committee Executive Directors or of Non-Executive Directors a Non-Executive Directors. Please refer page 27 majority of whom shall be Independent. 7.10.5(b) Remuneration Committee The Remuneration Committee shall recommend the Compliant Please refer remuneration procedure on page Functions remuneration of the Chief Executive Officer and Executive 27 of this Report Directors
30 Annual Report 2017/18
Rule No. Subject Applicable Requirement Compliance Details Status
7.10.5(c) Disclosure in the Annual Names of Directors comprising the Remuneration Compliant Please refer remuneration procedure on Report relating to Committee page 27 of this Report Remuneration Committee Statement of remuneration policy Complaint Please refer page 27 Aggregated remuneration paid to Executive and Non- Complaint Please refer page 92 Executive Directors 7.10.6 Audit Committee The company shall have an Audit Committee Compliant Names of the members of the Audit Committee are stated on page 47 7.10.6(a) Composition of Audit Shall comprise of Non-Executive Directors a majority of Compliant Audit Committee consists of Three Committee whom will be Independent Independent Non-Executive Directors. Please refer page 47 7.10.6(b) Audit Committee Functions A Non-Executive Director shall be appointed as the Compliant Chairman of the Audit Committee is an Chairman of the Committee Independent Non-Executive Director The Chief Executive Officer and Chief Financial Officer Compliant The Managing Director, General Manager, should attend Audit Committee meetings Director Finance of the Company and the Group Chief Financial Officer (CFO) and the Head of Internal Audit of the Group Management Audit and Systems Review Department of Hayleys PLC have attended Audit Committee meetings. The Chairman of the Audit Committee or one member Compliant Chairman of the Audit Committee is a should be a member of a professional accounting body. Senior Chartered Accountant Functions shall include: Compliant The terms of reference of the Audit • Overseeing of the preparation, presentation and Committee have been agreed upon by the adequacy of disclosures in the Financial Statements in Board accordance with Sri Lanka Accounting Standards
31 The Kingsbury PLC
CORPORATE GOVERNANCE
Rule No. Subject Applicable Requirement Compliance Details Status
7.10.6(b) Audit Committee Functions • Overseeing the compliance with financial reporting Complaint Continued requirements, information requirements of the Companies Act and other relevant financial reporting related regulations and requirements
• Overseeing processes to ensure that the internal Complaint controls and risk management are adequate to meet the requirements of the Sri Lanka Auditing Standards
• Assessment of the independence and performance of Complaint the External Auditors.
• Make recommendations to the Board pertaining to Complaint appointment, re–appointment and removal of External Auditors, and approve the remuneration and terms of engagement of the External Auditors
7.10.6(c) Disclosure in the Annual Names of Directors comprising the Audit Committee Complaint Please refer page 47 Report relating to Audit Committee The Audit Committee shall make a determination of the Complaint Please refer Audit Committee Report on independence of the Auditors and disclose the basis for page 47 such determination The Annual Report shall contain a Report of the Audit Complaint Please refer Audit Committee Report on Committee setting out of the manner of compliance with page 47 their functions 9.2 Related Party Transactions Functions shall include: Compliant The Committee of the Parent Company Review Committee Functions Hayleys PLC functions as the committee of the Company. Please refer page 46
• Review in advance all proposed related party Complaint transactions of the group either prior to the transaction being entered into or, if the transaction is expressed to be conditional on such review, prior to the completion of the transaction. 32 Annual Report 2017/18
Rule No. Subject Applicable Requirement Compliance Details Status
9.2 Related Party Transactions • Seek any information the Committee requires from Complaint Continued Review Committee Functions management, employees or external parties with regard to any transaction entered into with a related party.
• Obtain knowledge or expertise to assess all aspects of Complaint proposed related party transactions where necessary including obtaining appropriate professional and expert advice from suitably qualified persons.
• Recommend, where necessary, to the Board and obtain Complaint their approval prior to the execution of any related party transaction.
• Monitor that all related party transactions of the entity Complaint are transacted on normal commercial terms and are not prejudicial to the interests of the entity and its minority shareholders.
• Meet with the management, Internal Auditors/ Complaint External Auditors as necessary to carry out the assigned duties.
• Review the transfer of resources, services or Complaint obligations between related parties regardless of whether a price is charged.
• Review the economic and commercial substance Complaint of both recurrent/non recurrent related party transactions.
• Monitor and recommend the acquisition or disposal Complaint of substantial assets between related parties, including obtaining ‘competent independent advice’ from independent professional experts with regard to the value of the substantial asset of the related party transaction. 33 The Kingsbury PLC
CORPORATE GOVERNANCE
Rule No. Subject Applicable Requirement Compliance Details Status
9.2.2 Composition of the Related Two Independent Non-Executive Directors and one Compliant The Committee of the Parent Company Party Transactions Review Executive Director Hayleys PLC functions as the committee of Committee the Company.
Please refer page 46 9.2.3 Related Party Transactions If the parent company and the subsidiary Company both Compliant The Committee of the Parent Company Review Committee are listed entities, the Related Party Transactions Review Hayleys PLC functions as the committee of Committee of the parent company may be permitted to the Company. function as such Committee of the subsidiary. Please refer page 46 9.2.4 Related Party Transactions Shall meet once a calendar quarter Complaint Committee met 04 times during the Review Committee financial year.
Please refer page 46 9.3.2 Related Party Transactions Report by the Related Party Transactions Review Complaint Please refer page 46 Review Committee Disclosure Committee in the Annual Report A declaration by the Board of Directors Complaint Please refer page 46
34 Annual Report 2017/18 RISK MANAGEMENT
The company under the guidance of the behavior, that provides the foundation Risk is inevitable, managing Exchange Rate Risk Hayleys Group’s Management Audit & for the other components of the Internal it is our challenge. Effective Movements in foreign currency System Review Department (MASRD) Control system. exchange rates could have an opposing maintains a comprehensive system to Risk Management is fundemental to our success. impact resulting in exchange losses. This identify, measure and mitigate risks. The Increasing competition for skilled risk is due to a major portion of long risk function comes under the overall labour has compelled the Group to seek Building a strong disciplined term borrowings consisting of foreign supervision of the Kingsbury Board ways of enhancing the productivity and risk culture where risk borrowings. Therefore the Company of Directors, who recognise that they efficiency of our employees in order to management becomes obtains the services of the Hayleys PLC’s are responsible for providing return ensure superior service quality for our Treasury Department to constantly to shareholders, which is consistent customers. Inadequacies in operational the responsibility of all employees, is a key priority at monitor exchange rates and financial with the responsible assessment and efficiency can potentially affect overall markets. mitigation of risk. The Board is aware profitability while below par service Kingsbury. that any internal control systems quality will have a direct impact on guest On the other hand sales in foreign contains inherent limitations and satisfaction, competitiveness and market currency benefits from gradual therefore, the Board takes appropriate share. We ensure continued compliance social, technological, industrial, legal devaluation of Rupee. Hence it works action to minimise such situations. to several national and international and environmental etc.. Despite the as a natural hedge for the loan interest Both risk and internal control function accreditations and certifications, thereby challenges, the markets have been and capital payments to be made in US work in sync to ensure that the risks compelling our property to maintain resilient and with the support of Parent Dollars. are identified timely and necessary the highest standards in quality and Company the Hayleys PLC with its mitigatory steps are taken immediately. efficiency. Meanwhile, implementation Group’s business model, diversity of its Risk Level – High of robust systems have facilitated the leisure portfolio and wide geographical The three main objectives of Internal tracking and analysis of each aspect of spread our business too have been Liquidity Risk Controls of the company are, our hotel operations and allows us to resilient and grown in corporate stature. The Company’s Treasury policies and benchmark our operational efficiency procedures are set out by the Treasury 1. Ensuring the reliability of Financial against global best practices. Strategic The following aspects are perceived as Department of the Hayleys Group and Reporting . emphasis has also been placed on the most dynamic risks and are therefore sourcing funding options from Banks and continually investing in training and proactively managed and monitored by other Financial Institutions are advised 2. Improving the effectiveness and the developing our people. by the Group Treasury Department in efficiency of hotel operations. the senior management. order to reach optimal mix of funding. Managing risks in an ever 3. Compliance with the laws and changing environment Risk Level - Moderate / High regulations. Todays, businesses work in an increasing dynamic environment and influenced Management, with the oversight of the by many external factors, some of it Board, has created and maintained a are not controllable. These diffident “culture of honesty” and promotes ethical spheres include governmental, financial, 35 The Kingsbury PLC
RISK MANAGEMENT
IT Systems Risk manages and seeks to improve terms The Hotel initiates the drive to achieve and implemented to ensure that the The Group has in place a formalised and and conditions of our relationships with service excellence and continuous Company holds a competitive advantage comprehensive IT policy which is clearly these partners. improvements in all services rendered to and is able to offer customers value and articulated to all employees. Travellers its customers providing value for money. differentiation. now have access to far more information The Finance and IT departments of through comparison websites, search the company works collaboratively To keep up with the competitive Striving towards reaching 100% engines and online travel agents. Booking with Hayleys Group IT and specialist properties that are coming up in the customer satisfaction via continual channels and technological systems are third-party technology partners to city of Colombo, the Company will have improvement, the Company continuously a key part of the guest journey and an continuously monitor, manage and to invest and maintain the required reviews guest feedback and responds important value driver. This is also an optimise our systems and channels, standards of service and provide promptly to any issues. area where there is rapid change in terms including their resilience through internationally recognised amenities to The Company places a strong focus on of technology, guest expectations and backup systems and business continuity its guests. participating in international travel relationships with online travel agents practices, to enhance all aspects of the Prevailing government sanctioned trade exhibitions such as ATM, OTM, and other intermediaries. guest journey and optimise the revenue to the company. minimum room rates minimise the ITB, WTM in established markets and Threats to information security, from risk of price competition. However in emerging markets such as, thereby payment card information to other The company takes information security alternative accommodation in the market exploiting new opportunities and information held in IT systems or, in very seriously and has applied risk- has had an adverse impact on room sales. generating new business. paper format and other media, remain based methods to build capability and Therefore a diversified sales strategies The company also closely collaborates of concern. We effectively manage resilience into our systems and processes. are in place to mitigate any adverse with local tourism authorities in and keep under review our channels, The Hayleys group plays a critical role in effects. With international food marketing initiatives such as arranging information technology infrastructure managing the data security to contain the promotions in collaboration with FAM tours, bloggers conferences and and technological systems to optimise risk and reduce the company’s exposure, internationally recognised reputed chefs destination promotions. performance and resilience against any tightly controlling sensitive data through to promote the Hotel to target business vulnerable threat that may impact on limited and monitored access. and leisure communities differentiates Risk level - Moderate / High the company’s revenue and delivery Risk Level - Moderate the hotel from its competitors, not only channels, guest experience and return for sustaining and strengthening the loyalty Safeguarding Physical Assets our owners and investors. Competition Risk and patronage of regular customers but Natural disasters, fire, accidents, crime We have in place a multi-channel The competitive actions of industry also enticing and attracting new ones. and unethical behavior in and around management strategy that focuses across peers and threat of new entrants could the resorts can result in destruction and/ The Company closely monitors industry the entire guest journey and encourages critically affect the performance of the or loss to our assets and infrastructure trends and competitors’ activities and guests to book directly with the company Company resulting in lower occupancy, leading to disruptions to operations as strategies by reviewing respective or via our own website and reservation rates and loss of market share. well as financial loss. market share and performance. Plans systems. The company proactively and promotions are then developed
36 Annual Report 2017/18
This risk exposure is mitigated through to check on the credit worthiness prior to Risk Management Process documented business continuity and granting of credit the Company strives to disaster recovery plans, 24 hour security keep a good control of its debtors. on premises, signage in appropriate locations to increase staff and guest A dedicated credit team through timely awareness and insurance coverage for monitoring and follow up’s keep close physical damage of properties. watch over the debtors. Internal Controls Determining the Material Aspect of Risk are continuously improved to minimise Risk Level - Moderate the losses from inefficiencies and frauds.
Raw Materials and Supply Chain Risk Level - Moderate Identifying the Risk Indicators Risks The Group’s key raw materials comprise Government Policy Risk of food inputs which are sourced from Ad hoc changes to existing local statutes multiple suppliers. Inadequate supply and lack of predictability in enforcement of raw materials and/or procurement of timelines can result in numerous Analysing Risk inferior quality raw materials can lead to financial and operational challenges. This financial losses, disruptions to operations can lead to ambiguity of interpretation Risk Assessment Risk and reputational losses. and difficulties in planning and budgeting, resulting in financial as well The Group’s supply chain and material as reputational losses. Evaluating Risk management processes are well established and we have nurtured The Group manages this risk exposure relationships with a diverse pool of through consistently monitoring and suppliers thereby limiting exposure reviewing legal requirements and Mitigating/Managing Risk to a single party. We also rotate supply statutory returns. Compliance audits contracts on a regular basis to ensure are also conducted regularly by the strong relationships with all suppliers. Internal Audit function. We are an active contributor to industry advisory and Risk Level - Moderate policy making bodies and regularly make Monitoring and Review representations to these bodies upon Credit Risks invitation. The Group also continuously Risk of default by Debtors - Debtors reviews and upgrades its information defaulting the company will result in systems to detect and report deviations. reduced cash flows and its profitability Through strict implementation of credit Risk Level – Moderate policies and through stringent controls 37 The Kingsbury PLC ELEGANCE
No matter the event, be it the wedding of the century or a small corporate business meeting, the Kingsbury is equipped to create the perfect affair. Thanks to the dedicated service of our experienced teams, we have a fantastic selection of spacious wedding halls in Colombo and modern boardrooms that will add a touch of elegance & magic to your special celebration.
38 Annual Report 2017/18 ENVIRONMENT & SOCIAL RESPONSIBILITY REPORT
As a responsible Corporate Citizen, The Kingsbury’s, management philosophy encompasses concepts of environmental responsibility and conservation of resources with the ultimate intention of minimising negative impacts upon the natural environment and preserving the country’s natural resources for future generations.
The Kingsbury Nurtures with the gift of sight. Since its inception On the 1st of October 2016 The this initiative has provided more than Kingsbury launched The Kingsbury 300 life changing cataract surgeries for Nurtures CSR brand as a representation senior citizens throughout Sri Lanka. The of its inspirational CSR initiatives. restoration of eye sight has enabled these The brand was conceptualised to individuals and families to go about their represent The Kingsbury’s commitment daily routines with renewed hope. to sharing the fruits of its labour with the community; young and old the conservation of fauna, flora and ecosystems of the planet. The year 2017 saw more CSR initiatives under The Kingsbury Nurtures as it continues to touch people’s lives and preserve the environment.
Gift of Sight Sponsoring 20 cataract surgeries a month from May 2016 through ‘HelpAge Sri Lanka’ this initiative continues to help underprivileged senior citizens of Sri Lanka with their lives by providing them
39 The Kingsbury PLC
ENVIRONMENT & SOCIAL RESPONSIBILITY REPORT
Plant donation to ‘Orange According to research conducted by crops, farmers can create a safe and Elephant Project ’ SLWCS, orange trees are a good buffer sustainable elephant deterrent, providing As a part of The Kingsbury Nurtures tree crop. By growing a tall barrier of citrus new income source for the families in planting initiative 500 Orange plants trees around their rice and vegetable case they do lose their primary crops. were donated to the Sri Lanka Wild Life Conservation Society on 16th September 2017. The plants were donated to SLWCS for their ‘Orange Elephant’ project conducted around farming communities bordering the “Wasgamuwa National Park”.
40 Annual Report 2017/18
Vesak Dansala 2017 Breast Cancer Screening Clinics awareness of the threat to women. While Colombo was declared the epicentre for in collaboration with Cancer Care most people are aware of breast cancer, International Vesak Day celebrations Association Sri Lanka many do not to take the steps necessary in 2017 by the United Nations and Building on the successful campaign to get themselves tested. If in the event saw grand celebrations throughout held in October 2016, The Kingsbury breast cancer is detected in its early the city. The Kingsbury also took part embarked on another breast cancer stages, the patients stand a better chance by organising a ‘soup dansala’ at The awareness campaign in collaboration of successful recovery. The clinics had an Balmoral Terrace followed by ‘Bakthi with the Cancer Care Association of overwhelming response from the public Geetha’ at the entrance of the hotel. Sri Lanka. The 2017 programme saw 4 with close to 130 screenings and 2-3 Vesak goers and employees of companies breast cancer consultation and screening probable cases being detected. around the area flocked to the dansala for clinics organised at The Kingsbury, a hearty soup accompanied with buns. Winchester Ballroom throughout the Staff members from all departments month of October. of The Kingsbury joined hands as they distributed the food to the crowds. The month of October is declared as the Breast Cancer Awareness Month Internationally and The Kingsbury’s commitment to conduct such clinics on an annual basis will certainly increase
41 The Kingsbury PLC ANNUAL REPORT OF THE DIRECTORS ON THE AFFAIRS OF THE COMPANY
The Board of Directors are pleased to Accounting Policies Directors’ Emoluments and other The Committee met four times during present their Report and the Audited The accounting policies adopted in Benefits the Financial Year 2017/18. Financial Statements of the Company for preparation of the Financial Statements Directors’ emoluments in respect of the the year ended 31st March 2018. are given on pages 59 to 97 Changes Company for the financial year ended Related Party Transactions are given made to the Accounting Policies during 31st March 2018 is given in Note 6 to the in note 29 in the notes to the Financial The details set out herein provide the accounting period are described Financial Statements. Statements. pertinent information required by the under Note 2 of the Financial Statements. Companies Act No. 07 of 2007 and the Executive Directors’ emoluments is Corporate Donations Colombo Stock Exchange Listing rules Interest Register established within an established Donations made during the year were and are guided by recommended best The Company in compliance with the framework. The total emoluments of Rs. 2,040,000/-. accounting practices. Companies Act No. 07 of 2007, maintains Executive Directors for the year ended An amount of Rs. 2,000,000/- was an Interest Register. Particulars of the 31st March 2018 is Rs. 4,440 Mn. The Review of The Year approved as donations by shareholders entries in the Register are detailed below. total emoluments of Non-Executive The Chairman’s Message describes Directors for the year ended 31st March for the financial year 2017/18. the Company’s affairs and mentions Directors’ Interests in Shares 2018 is Rs. 2,580 Mn determined important events of the year. according to scales of payment decided Ratification of the additional amount Mr. K. D. D. Perera, Co-Chairman (Non- upon by the Board. The Board is satisfied of Rs. 40,000/- made on donations for Executive) of The Kingsbury PLC has Principal Activity that the payment of this emoluments is 2017/18 will be sought at the Annual purchased 3,216,146 Ordinary shares of fair to the company. General Meeting. The Principal Activity of the Company the Company on 10th November 2017 . is hoteliering and is the owner of The Kingsbury Hotel, Colombo. Related Party Transactions Directors of the Company as at Vallibel One PLC Sold 3,216,146 No. of 31st March 2018 shares in which Mr. K. D. D. Perera has a The Board of Directors have given the Mr. A. M. Pandithage - Executive Financial Statements controlling power. following statement in respect of the The Financial Statements of the Related Party Transactions. Chairman Company are given on pages 49 to 97 Directors’ Interests in Transactions Mr. Dhammika Perera* - Co-Chairman The Related Party Transactions of the The Directors of the Company have made (Non-Executive) Company during the financial year have Auditor’s Report the general disclosure provided for in been reviewed by the Related Party Mr. L. T. Samarawickrama – Managing The Auditor’s Report on the Financial section 192 (2) of the Companies Act Transactions Review Committee of Director Statements is given on page 50 No. 07 of 2007. Note 29 to the Financial Hayleys PLC the parent Company and are Statements dealing with related party Mr. N. J. De S. Deva-Aditya** in compliance with the Section 09 of the disclosure includes details of their CSE Listing Rules. Mr. S. C. Ganegoda* interests in transactions. 42 Annual Report 2017/18
Mr. S. J. Wijesinghe* Mr. Dhammika Perera holds 50.44% The Board, having reviewed the system Messrs Ernst & Young, Chartered directly and indirectly of the total issued of internal controls, is satisfied with its Accountants, are deemed re-appointed, Mr. L. N. De S. Wijeyeratne** shares of Hayleys PLC, which holds effectiveness for the period up to the date in terms of section 158 of the Companies Ms. R. N. Ponnambalam** 112,307,057 shares in The Kingsbury of signing the Financial Statements. Act No. 07 of 2007, as Auditors of the PLC. Company. Mr. J. P. Van Twest ** Going Concern Mr. D. E. Silva Mr. M. H. Jamaldeen, spouse of The Directors, after making necessary A resolution proposing Directors be Mrs. I. Jamaldeen currently holds authorised to determine the Auditors Ms. I. Jamaldeen** inquiries and reviews including the 1,186,583 shares in The Kingsbury PLC. reviews of the Company’s budget for emoluments will be submitted at the Ms. A. A. K. Amarasinghe* (Alternate the ensuing year, capital expenditure Annual General Meeting. Director to Mr. Dhammika Perera) Insurance and Indemnity requirement, future prospects and risks, The Company is covered by Directors cash flows and borrowing facilities, Investments (Short Term Deposits) * Non-Executive Director and Officers (D&O) Liability Insurance have a reasonable expectation that the Details of the investments held by the ** Independent Non-Executive Director obtained from Orient Insurance Ltd by Company has adequate resources to Company are disclosed in Note 19.1 to the parent Company, Hayleys PLC with a continue in operational existence for the the Financial Statements. In terms of the Article No. 87 of the premium of LKR 5.4 Mn and the limit on foreseeable future. Articles of Association of the Company, liability of the cover is USD 5 Mn. Property, Plant and Equipment Messrs. A.M. Pandithage, N. J. De S. Therefore, the going concern basis has An analysis of the property, plant and Deva-Aditya and S. J. Wijesinghe retire Employment been adopted in the preparation of the equipment of the Company, additions by rotation and being eligible, offer The number of persons employed by the Financial Statements. and disposals made during the year and themselves for re-election. Company was 793. depreciation charged during the year Auditors Directors’ Shareholdings are set out in Note 12 to the Financial Internal Controls The Auditors, Messrs Ernst & Young, Statements. The shareholdings of the Directors as at The Directors acknowledge their Chartered Accountants, were paid Rs. 31st March 2018 were as follows. responsibility for the Company’s system 845,617/- (2017- Rs. 805,350/-) as audit Capital Commitments No. of Shares As at As at of internal controls. The system is fees by the Company. In addition, they Details of the capital commitments of 31.03.2018 31.03.2017 designed to give assurance, inter alia, were paid Rs. 424,382/- (2017- the Company as at 31st March 2018 are regarding safeguarding the assets, the Rs. 324,295/-) by the Company for non- disclosed in Note 25 to the Financial Mr. S. C. maintenance of proper accounting audit related work. Statements. Ganegoda 55,713 55,713 records and the reliability of financial Mr. Dhammika information generated. However, any As far as the Directors are aware, the Stated Capital Auditors do not have any relationship Perera 3,216,146 - system can only ensure reasonable and The Stated Capital of the Company is Rs. (other than that of an Auditor) with the not absolute assurance that errors and 836,000,000/- comprising 242,000,000 Company other than those disclosed irregularities are either prevented or ordinary shares. detected within a reasonable time period. above. The Auditors also do not have any interest with the Company. 43 The Kingsbury PLC
ANNUAL REPORT OF THE DIRECTORS ON THE AFFAIRS OF THE COMPANY
Reserves Major Shareholders Contingent Liabilities Annual General Meeting Total Company reserves as at 31st March The twenty largest shareholders of the There were no material contingent The Annual General Meeting will be held 2018 amounts to Rs. 1,698 Mn (2017 Rs. Company as at 31st March 2018, together liabilities outstanding as at 31st March at Hayleys Conference Room, No. 400, 1,555 Mn) Movements are shown in the with an analysis are given on page 99 of 2018 other than that described in Note Deans Road, Colombo 10, Sri Lanka at Statement of Changes in Equity in the the Annual Report. 24 of the Financial Statements. 3.00 p.m. on Friday 22nd June 2018. The Financial Statements. Notice of the Annual General Meeting Public Shareholding Post Balance Sheet Events appears on page 102 of the Annual Taxation As at 31st March 2018, 38.68% of the Subsequent to the date of the Balance Report. The tax position of the Company is given issued capital of the Company was Sheet no circumstances have arisen in Notes 10 and 18 to the Financial held by the public comprising 3,867 which would require adjustments to For and on behalf of the Board Statements. shareholders. the accounts. Significant post balance THE KINGSBURY PLC sheet events which in the opinion of Employees and Industrial Statutory Payments the Directors require disclosure are Relations The Directors to the best of their described in Note 33 to the Financial There have been no material issues knowledge and belief are satisfied that Statements. pertaining to employees and industrial all statutory payments in relation to the relations of the Company during the government and the employees have A. M. Pandithage Financial Year. been made and provided. Executive Chairman
Shareholding The number of registered shareholders of the Company as at 31st March 2018, was 3,872. L. T. Samarawickrama Managing Director Disclosure as per Colombo Stock Exchange Rule No. 7.6.xi
2018 2017
Market price per share as at 31st March - Rs. 18.00 15.50 Highest share price during the year (13.03.2018) - Rs. 19.60 18.00 Hayleys Group Services (Pvt) Ltd. Lowest share price during the year (30.01.2018) - Rs. 12.90 14.80 Secretaries Net Assets per share - Rs. 10.47 9.88 10th May 2018 Ordinary shares in issue - numbers 242,000,000 242,000,000
44 Annual Report 2017/18 STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible, under They also confirm that the Financial Compliance Report Sections 150 and 151 of the Companies Statements have been prepared and The Directors confirm that to the Act No. 07 of 2007, to ensure compliance presented in accordance with the Sri best of their knowledge, all statutory with the requirements set out therein to Lanka Accounting Standards (SLFRS/ payments relating to employees and the prepare Financial Statements for each LKAS). The Financial Statements Government that were due in respect financial year giving a true and fair view provide the information required by the of the Company as at the Balance Sheet of the state of affairs of the Company Companies Act and the listing rules of date have been paid or where relevant, as at the end of the financial year and the Colombo Stock Exchange. provided for. of the profit and loss of the Company for the financial year. The Directors are The Directors have taken reasonable By Order of the Board also responsible, under Section 148 for measures to safeguard the assets of ensuring that proper accounting records the Company and in that context, have are kept to disclose, with reasonable instituted appropriate systems of internal accuracy, the financial position and control in order to prevent and detect enable preparation of the Financial fraud and other irregularities. Statements. Hayleys Group Services (Pvt) Ltd. The External Auditors, Messrs. Ernst & Secretaries The Board accepts responsibility for the Young, Chartered Accountants, were integrity and objectivity of the Financial deemed re-appointed in terms of section 10th May 2018 Statements presented. The Directors 158 of the Companies Act No. 07 of confirm that in preparing the Financial 2007 and were provided with every Statements, appropriate accounting opportunity to undertake the inspections policies have been selected and applied they considered appropriate to enable consistently while reasonable and them to form their opinion on the prudent judgments have been made Financial Statements. The Report of the so that the form and substance of Auditors, shown on pages 50 to 53 sets transactions are properly reflected. out their responsibilities in relation to the Financial Statements.
45 The Kingsbury PLC RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT
The Related Party Transaction review Attendance • To monitor that all related party Task of the Committee Committee of Hayleys PLC, the parent transactions of the entity are The Committee reviewed the Company functions as the Committee of Dr. H. Cabral, PC 4/4 transacted on normal commercial related party transactions and their the Company in terms of the Section 9 of terms and are not prejudicial to the Mr. M. Y. A. Perera 4/4 compliances of The Kingsbury PLC and the Listing Rules of the Colombo Stock interests of the entity and its minority communicated the same to the Board. Exchange. Mr. S. C. Ganegoda 1/4 shareholders. • Meet with the management, Internal The Committee in its review process Composition of the Committee The duties of the Committee Auditors/External Auditors as recognized the adequate of the content The Related Party Transactions Review • To review in advance all proposed necessary to carry out the assigned and quality of the information forwarded Committee comprises two Independent related party transactions of duties. to its members by the management. Non-Executive Directors and one the group either prior to the • To review the transfer of resources, Executive Director and the members are transaction being entered into or, services or obligations between as follows. if the transaction is expressed to be related parties regardless of whether conditional on such review, prior to a price is charged. Dr. H. Cabral**, PC - Chairman the completion of the transaction. Mr. M.Y. A. Perera ** • To review the economic and Dr. Harsha Cabral, PC. • Seek any information the Committee commercial substance of both Chairman Mr. S. C. Ganegoda* requires from management, recurrent/non recurrent related ** Independent Non-Executive employees or external parties to with Related Party Transactions Review party transactions *Executive regard to any transaction entered into Committee of Hayleys PLC with a related party. • To monitor and recommend the acquisition or disposal of substantial Attendance • Obtain knowledge or expertise to 16th May 2018 assets between related parties, Committee met 04 times during the assess all aspects of proposed related including obtaining ‘competent Financial Year 2017/18. party transactions where necessary independent advice’ from including obtaining appropriate independent professional experts Meetings were held on 17th May 2017, professional and expert advice from with regard to the value of the 4th August 2017, 2nd November 2017 suitably qualified persons. and 7th February 2018 substantial asset of the related party • To recommend, where necessary, to transaction. the Board and obtain their approval prior to the execution of any related party transaction.
46 Annual Report 2017/18 AUDIT COMMITTEE REPORT
The Audit Committee comprises, three Independent Non-Executive Directors. • reviewed the processes in place department, and was satisfied that to assess the effectiveness of the the internal audit function was The Chairman of the Audit Committee is Mr. L. N. De S. Wijeyeratne, a fellow member Internal Financial Controls that are in independent of the activities it of the Institute of Chartered Accountants of Sri Lanka. The names of the members are place to provide reasonable assurance audited and that it performed with given in this report and a brief profile of each member is given on pages 18 to 19. that assets are safeguarded and that impartiality, proficiency and due the financial reporting system can professional care. The Committee met formally four times during the financial year ended 31st March be relied upon in preparation and • discussed and approved the Internal 2018. The attendance of the members at these meetings were as follows: presentation of Financial Statements. Audit Plan for the ensuing year. • recommended to the Board, the re- Independent 8th May 27th July 26th October 30th January Total It also reviewed the reports of the appointment of external auditors for Non-Executive 2017 2017 2017 2018 internal auditors covering, all sectors a further period of one year subject to Director of the hotel and considered the major approval by the shareholders. findings of internal investigations and Mr. L. N. De S. Present Present Present Present 4/4 • noted that the External Auditors management’s responses thereto. Wijeyeratne Messers. Ernst & Young were Ms. R. N. Present Present Out of Present 3/4 independent and objective in Minutes of the Audit Committee Ponnambalam Country performing the yearend audit and meetings are approved by the Committee had no relationship nor interest Chairman at the following meeting and Mr. J. P. Van Twest Present Present Via tel con Excused 3/4 in the Company in terms of the are tabled at Board meetings to ensure Companies Act No 7 of 2007 and that all Directors are kept informed of its The Managing Director, General additional assurance on the reliability that the audit was being carried activities. Manager, Director Finance and the Group of the Financial Statements through a out in accordance with the Sri Chief Financial Officer (CFO) and the process of independent and objective Lanka Accounting Standards and Head of Internal Audit of the Group review. other statutory and regulatory Management Audit and Systems Review requirements. Department of Hayleys PLC attend the During the period under review the meetings of the Audit Committee by Committee, • reviewed the management letter L. N. De S. Wijeyeratne invitation. The Chairman of the Company issued by the external auditors Chairman and other Directors attend the meetings • reviewed the quarterly financial • discussed and finalized the nature Audit Committee as required. information of the Company to and scope of audit with the external monitor the integrity of the financial auditors for the ensuing year 10th May 2018 The Committee functions within the statements and the significant Terms of Reference approved by the financial reporting judgements • The Hayleys PLC’s Group Board of Directors. In addition it reviews Management Audit and Systems • recommended the year end financial and monitors the financial reporting Review Department act as the statements to the Board for its process of the Company, so as to provide Internal Auditors for the Company. approval and publication. Reviewed the scope, functions and resources of the internal audit 47 The Kingsbury PLC EXPERIENCE
Whenever you stay at the Kingsbury, it stays with you for life. The Kingsbury provides a unique experience for every visitor, bringing an atmosphere of warmth and comfort amid the quintessence of luxury.
Our experienced staff dedicate their every effort to serving each guest with a spirit of passion, care and attention to detail, ensuring each stay is equally memorable.
48 Annual Report 2017/18 FINANCIAL STATEMENTS
Independent Auditors’ Report...... 50 Statement of Profit or Loss...... 54 Statement of Comprehensive Income...... 55 Statement of Financial Position...... 56 Statement of Changes in Equity...... 57 Statement of Cash Flows...... 58 Notes to the Financial Statements ...... 59
Financial Calender
Annual General Meeting 22nd June 2018
Interim Financial Statement - 1st Qurter 2nd week of August 2018
Interim Financial Statement - 2nd Qurter 2nd week of November 2018
Interim Financial Statement - 3rd Qurter 2nd week of February 2019
Interim Financial Statement - 4th Qurter 2nd week of May 2019
49 The Kingsbury PLC INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report Key audit matters To the Shareholders of The Kingsbury PLC Key audit matters are those matters that, in our professional judgment, were of most Report on the audit of the Financial Statements significance in the audit of the Financial Statements of the current period. These Opinion matters were addressed in the context of the audit of the Financial Statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a separate We have audited the Financial Statements of The Kingsbury PLC, “the Company” opinion on these matters. For each matter below, our description of how our audit which comprise the statement of Financial Position as at 31 March 2018, and the addressed the matter is provided in that context. Statement of Comprehensive Income, Statement of Changes In Equity and Statement of Cash Flows for the year then ended, and notes to the Financial Statements, including We have fulfilled the responsibilities described in the Auditor’s responsibilities for a summary of significant accounting policies. the audit of the Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures In our opinion, the accompanying Financial Statements give a true and fair view designed to respond to our assessment of the risks of material misstatement of the of the financial position of the Company as at 31 March 2018 and of its financial Financial Statements. The results of our audit procedures, including the procedures performance and its cash flows for the year then ended in accordance with Sri Lanka performed to address the matters below, provide the basis for our audit opinion on the Accounting Standards. accompanying Financial Statements. Basis for opinion We conducted our audit in accordance with Sri Lanka Auditing Standards (SLAuSs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by CA Sri Lanka (Code of Ethics) and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
50 Annual Report 2017/18
Key audit matter How our audit addressed the key audit Recoverability of Property, plant & Our audit procedures focused matter Equipment in Platinum 1 on the assessment of the Property plant & Equipment includes Rs. 44Mn recoverable amount performed Valuation of Building and Building Integrals Our audit procedures focused on the worth of assets relating to Platinum1. by the management, include the Buildings and building integrals of the valuation performed by the external Management assessed the recoverability of following, among others: Company are reflected at revaluation and valuer, which included the following such assets using significant judgements and amounts to Rs. 3,080 Mn as at 31 March 2018. among others. estimates, as disclosed in Note 12.2 & 12.8 to • We reviewed management’s • We evaluated the competence, the Financial Statements, of which a probable identification of indicators of Fair value was determined by an external capabilities and objectivity of change could lead to material differences in the impairment under accounting valuer engaged by the Company. The valuation the external valuer appointed by estimated recoverable amount. standards. is subjective to the significant judgment the management. We read the This assessment was important to our audit • We involved our internal and estimates used by the valuer, which are engagement letter issued by the due to the magnitude of the carrying value specialised resources to disclosed in Note 2.2 and 12.2 to the Financial management and the valuation of the related assets as well as the subjective assist us in evaluating the Statements. report issued by the valuer assumptions and judgment involved. appropriateness of methodology to obtain an understanding used and reasonableness of key Due to the magnitude of these assets relative of the work the valuer, and assumptions. to the total assets (68%), and the significance evaluated its the appropriateness • Further, we checked the of estimates and judgements associated with as audit evidence for the reasonability of the assumptions the valuation, this was considered a key audit recorded valuation of building used with the historical matter. and building integrals in the experience of the Company. Financial Statements. • In addition, we assessed • We engaged internal specialized the appropriateness of the resources to assist us in evaluating disclosures made in the financial the appropriateness of the statement Note no 2.2 and 12.8 valuation method used and range in this regard. of prices per square foot used. • In addition, we evaluated the overall appropriateness of the related financial statement disclosers in note no 2.2 and note 12.2.
51 The Kingsbury PLC
INDEPENDENT AUDITOR’S REPORT
Other information included in the Company’s 2018 Annual Report Auditor’s responsibilities for the audit of the Financial Statements Other information consists of the information included in the Annual Report, other Our objectives are to obtain reasonable assurance about whether the Financial than the Financial Statements and our auditor’s report thereon. The Management is Statements as a whole are free from material misstatement, whether due to fraud responsible for the other information. or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted Our opinion on the Financial Statements does not cover the other information and we in accordance with SLAuSs will always detect a material misstatement when it do not express any form of assurance conclusion thereon. exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the In connection with our audit of the Financial Statements, our responsibility is to economic decisions of users taken on the basis of these Financial Statements. read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained As part of an audit in accordance with SLAuSs, we exercise professional judgment and in the audit or otherwise appears to be materially misstated. If, based on the work maintain professional skepticism throughout the audit. We also: we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this • Identify and assess the risks of material misstatement of the Financial Statements, regard. whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide Responsibilities of management and those charged with governance for a basis for our opinion. The risk of not detecting a material misstatement resulting the Financial Statements from fraud is higher than for one resulting from error, as fraud may involve Management is responsible for the preparation of Financial Statements that give a collusion, forgery, intentional omissions, misrepresentations, or the override of true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control. internal control as management determines is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud • Obtain an understanding of internal control relevant to the audit in order to design or error. audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. In preparing the Financial Statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters • Evaluate the appropriateness of accounting policies used and the reasonableness of related to going concern and using the going concern basis of accounting unless accounting estimates and related disclosures made by management. management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material Those charged with governance are responsible for overseeing the Company’s financial uncertainty exists related to events or conditions that may cast significant doubt reporting process. on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial Statements or, if such disclosures
52 Annual Report 2017/18
are inadequate, to modify our opinion. Our conclusions are based on the audit Report on other legal and regulatory requirements evidence obtained up to the date of our auditor’s report. However, future events or As required by section 163 (2) of the Companies Act No. 07 of 2007, we have obtained conditions may cause the Company to cease to continue as a going concern. all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the • Evaluate the overall presentation, structure and content of the Financial Company. Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair CA Sri Lanka membership number of the engagement partner responsible for signing presentation. this independent auditor’s report is 2199.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Ernst & Young, Colombo We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to 10 May 2018 communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
53 The Kingsbury PLC STATEMENT OF PROFIT OR LOSS
Year ended 31 March Notes 2018 2017 Rs ‘000 Rs ‘000
Revenue 4 3,085,143 3,061,048 Cost of sales (1,630,688) (1,469,351) Gross profit 1,454,455 1,591,697
Other income and expenses 5 12,541 (4,503) Administrative expenses (1,060,184) (919,108) Marketing expenses (137,734) (129,346) Finance income 8 8,765 20,905 Finance expense 9 (89,914) (134,629) Profit before tax 6 187,929 425,016 Income tax expense 10 (48,775) (44,670) Net profit after tax 139,154 380,346
Basic earnings per share (Rs.) 11 0.58 1.57
The Accounting Policies and Notes on pages 59 through 97 form an integral part of the Financial Statements.
54 Annual Report 2017/18 STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 March Notes 2018 2017 Rs ‘000 Rs ‘000
Profit for the year 139,154 380,346
Other Comprehensive Income not to be reclassified to profit or loss in subsequent periods Re-measurement loss on defined benefit plans 23 (873) (4,508) Income tax effect on defined benefit plans 18 123 541 Other Comprehensive for the year, net of tax (750) (3,967)
Total Comprehensive Income for the year, net of tax 138,404 376,379
The Accounting Policies and Notes on pages 59 through 97 form an integral part of the Financial Statements.
55 The Kingsbury PLC STATEMENT OF FINANCIAL POSITION
As at 31 March Notes 2018 2017 Rs ‘000 Rs ‘000
ASSETS Non-current assets Property, plant and equipment 12 3,898,611 3,860,890 Intangible assets 13 21,214 25,517 3,919,825 3,886,407 Current assets Inventories 14 74,053 73,004 Trade and other receivables 15 147,581 127,901 Other non financial assets 16 67,311 92,570 Income tax receivable 32,713 34,077 Short term deposits 17 100,934 347,949 Cash and Bank 19 194,050 148,793 616,642 824,294 Total assets 4,536,467 4,710,701
EQUITY AND LIABILITIES Equity Stated capital 26 836,000 836,000 Revaluation reserves 27 904,808 940,907 Retained earnings 793,072 613,646 2,533,880 2,390,553 Non-current liabilities Interest-bearing borrowings 22 510,618 942,101 Post employment benefit obligation 23 50,673 39,519 Deferred tax liability 18 231,745 206,808 793,036 1,188,428 Current liabilities Trade and other payables 20 327,423 262,855 Interest-bearing borrowings 22 747,354 568,755 Other non financial liabilities 21 134,774 300,110 1,209,551 1,131,720 Total equity and liabilities 4,536,467 4,710,701 I certify that these Financial Statements have been prepared in compliance with the requirements of the Companies Act, No. 07 of 2007.
Ajani Wijesiriwardana Director Finance The Board of Directors is responsible for the these Financial Statements. These Financial Statements were authorised for issue by the Board of Directors on 10 May 2018.
A M Pandithage L T Samarawickrama Executive Chairman Director The Accounting Policies and Notes on pages 8 through 34 form an integral part of the Financial Statements. 10 May 2018 Colombo 56 Annual Report 2017/18 STATEMENT OF CHANGES IN EQUITY
As at 31 March Notes Ordinary share Revaluation Retained Total capital reserve earnings Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Balance at 1 April 2016 836,000 905,830 440,154 2,181,984 Net profit for the period - - 380,346 380,346 Other comprehensive income - - (3,967) (3,967) Total comprehensive income - - 376,379 376,379 Transfer to retained earnings from revaluation reserve (39,113) 39,113 - Deferred tax on transfer 27 - 4,694 - 4,694 Revaluation adjustment (net of deferred tax) - (14,525) - (14,525) Revaluation during the year - 95,478 - 95,478 Deferred tax transfer on revaluation 18 - (11,457) - (11,457) Interim Dividends to equity holders (242,000) (242,000) Balance at 31 March 2017 836,000 940,907 613,646 2,390,553
Net profit for the period - - 139,154 139,154 Other comprehensive income - - (750) (750) Total comprehensive income - - 138,404 138,404 Transfer to retained earnings from revaluation reserve (41,022) 41,022 - Deferred tax on transfer 27 - 4,923 - 4,923 Balance at 31 March 2018 836,000 904,808 793,072 2,533,880
The Accounting Policies and Notes on pages 59 through 97 form an integral part of the Financial Statements.
57 The Kingsbury PLC STATEMENT OF CASH FLOWS
As at 31 March Notes 2018 2017 Rs ‘000 Rs ‘000
Operating activities Cash generated from operations 28.1 563,076 849,740 Interest received 8 8,765 20,905 Interest paid (80,975) (109,080) Tax paid (17,217) (15,644) Employee benefit obligations 23 (3,293) (2,123) Net cash generated from / (used in) operating activities 470,356 743,798
Investing activities Capital work in progress 12 (80,275) 1,624 Purchases of property, plant and equipment 12 (211,775) (243,400) Purchases of intangible assets 13 (1,257) (6,214) Proceeds from disposal of property, plant and equipment 6,706 1,181 Investments in fixed deposits (100,934) - Net cash used in investing activities (387,535) (246,809)
Financing activities Dividends paid 28.2 (121,000) (121,000) Payments on interest-bearing borrowings 28.2 (453,630) (430,128) Net cash generated from financing activities (574,630) (551,128)
Net increase in cash and cash equivalents (491,809) (54,139)
Movement in cash and cash equivalents At start of year 403,035 457,174 Net increase (491,809) (54,139) At end of year 19 (88,774) 403,035
The Accounting Policies and Notes on pages 59 through 97 form an integral part of the Financial Statements.
58 Annual Report 2017/18 NOTES TO THE FINANCIAL STATEMENTS
1. CORPORATE INFORMATION Comprehensive Income, and Statement of Changes in Equity, Statement of 1.1 General Cash Flows and Significant Accounting Policies and Notes have been prepared in accordance with Sri Lanka Accounting Standards (SLFRS). The Kingsbury PLC (“Company”) is a limited liability company incorporated in Sri Lanka and listed on the Colombo Stock Exchange. The address of its 2.1.3 Going Concern registered office is No. 48, Janadhipathi Mawatha, Colombo 1. The Company’s management has made an assessment of its ability to continue 1.2 Principal Activity and Nature of Operations as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of The principal activity of the Company is hoteliering and there has no changes any material uncertainties that may cast significant doubt upon the Company’s in the nature of such activities during the year. ability to continue as a going concern. Therefore, the Financial Statements continue to be prepared on the going concern basis. 1.3 Parent Entity and Ultimate Parent Entity The Company’s parent entity is Hayleys PLC. In the opinion of the directors, the 2.1.4 Comparative Information Company’s ultimate parent undertaking and controlling party is Hayleys PLC, The Financial Statements of the Company provide comparative information in which is incorporated in Sri Lanka. respect of the previous period. 1.4 Date of Authorisation for Issue 2.2 Significant Accounting Judgments And Estimates The Financial Statements of The Kingsbury PLC, for the year ended 31 March The presentation of the Financial Statements of the Company require the 2018 were authorised for issue in accordance with a resolution of the board of management to make judgment, estimates and assumptions, which may directors on 10 May 2018. affect the amounts of income expenditure, assets, liabilities and the disclosure of contingent liabilities at the end of the reporting period. In the process of 2. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT applying accounting policies, the key assumptions made relating to the future ACCOUNTING POLICIES and the sources of estimation at the reporting date together with related 2.1 Basis of Preparation judgments that have a significant risk of causing a material adjustment to the 2.1.1 Basis of Measurement carrying amounts of assets and liabilities and contingent liabilities in the next The Financial Statements have been prepared on a historical cost basis, except financial year are discussed below. for buildings and building integrals of property, plant, and equipment which were subsequently measured at fair value. The Financial Statements are a. Revaluation of property, plant and equipment presented in Sri Lankan Rupees Thousands, except when otherwise indicated. The Company measures buildings and building integrals at revalued amounts The preparation and presentation of these Financial Statements are in with gains in fair value being recognised in equity (Revaluation Reserve) compliance with the requirements of the Companies Act No. 07 of 2007. and losses in the Statement of Profit or Loss. The Company usually engages an external independent and qualified valuer to determine the fair values. 2.1.2 Statement of Compliance When current market prices of similar assets are available, such evidences The Financial Statements of the Company which comprise the Statement are considered in estimating fair values of these assets. In the absence of such of Financial Position, Statement of Profit or Loss, Statement of Other information the Company determines within reasonable fair value estimates, amounts that can be attributed as fair values, with the assistance of an independent professional valuer. Further details are given in Note 12.2. 59 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
b. Impairment of property, plant and equipment 2.3 Summary Of Significant Accounting Policies The impairment analysis is principally based upon discounted estimated cash 2.3.1 Foreign currencies flows from the use and eventual disposal of the assets. Factors like lower than a. Functional and presentation currency anticipated sales, resulting decreases of net cash flows and changes in the Items included in the Financial Statements of the entity are measured using the discount rates could lead to impairment. Further details are disclosed in Note currency of the primary economic environment in which the entity operates 12.8 to the Financial Statements. (‘the functional currency’). The Financial Statements are presented in Sri Lankan Rupees, which is the Company’s functional and presentation c. Components of Buildings and Useful Life currency. In determining the depreciation expense, the Company with the assistance of an independent professional valuer determined the components of buildings b. Transactions and balances that have varying useful lives. Approximation techniques and appropriate Foreign currency transactions are translated to the functional currency using groupings were used in such determination as well as in the assessment of the the exchange rates prevailing at the dates of the transactions. Foreign exchange useful lives of each component. Further details are given in Note 12.6. gains and losses resulting from the settlement of such transactions and from the translation at reporting date exchange rates of monetary assets and d. Deferred Tax Assets liabilities denominated in foreign currencies are recognised in the Statement of Deferred tax assets are recognised for unused tax losses to the extent that it Profit or Loss. is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the 2.3.2 Borrowing Costs amount of deferred tax assets that can be recognised, based upon the likely Borrowing costs directly attributable to the acquisition, construction or timing and the level of future taxable profits together with future tax planning production of an asset that necessarily takes a substantial period of time to strategies. Further details are given in Note 18. get ready for its intended use or sale are capitalised as part of the cost of the respective asset. All other borrowing costs are expensed in the period in which e. Post-Employment Benefit Obligation they occur. The post-employment benefit obligation; gratuity, is determined using actuarial valuations. An actuarial valuation involves making various assumptions 2.3.3 Property, Plant and Equipment which may differ from actual developments in the future. These include the a. At initial recognition determination of the discount rate, future salary increases, and staff turnover. Due to the complexity of the valuation; the underlying assumptions and its All property, plant and equipment are initially stated at cost net of accumulated long-term nature, the defined benefit obligation is highly sensitive to changes. depreciation and accumulated impairment losses, if any. Such cost includes All assumptions are reviewed at each reporting date. Further details are given the cost of replacing parts of the property, plant and equipment and borrowing in Note 23. costs for long-term construction projects if the recognition criterias are met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Company recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major refurbishment is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the 60 Annual Report 2017/18
recognition criteria are satisfied. All other repair and maintenance costs are 2018 2017 recognised in the profit or loss as incurred. Buildings and building integrals 15-50 years 15-50 years b. At subsequent measurement Plant, machinery and equipment 8 years 8 years Property, plant and equipment other than building and building integrals is Furniture and fittings 10 years 10 years stated at cost, excluding the costs of day to day servicing, less accumulated depreciation and accumulated impairment in value. Such cost includes the Motor vehicles 5 years 5 years cost of replacing part of the property, plant and equipment when that cost is Linen, cutlery, crockery and glassware 3-10 years 3-10 years incurred, if the recognition criteria are met. d. Subsequent costs Building and building Integrals are subsequently measured at fair value less Subsequent costs are included in the asset’s carrying amount or recognised as accumulated depreciation and such valuation are carried out by external a separate asset as appropriate, only when it is probable that future economic independent valuers. Valuations are performed with sufficient frequency to benefits associated with the item will flow to the Company and the cost of the ensure that the fair value of a revalued asset does not differ materially from its item can be measured reliably. All other repairs and maintenance are charged carrying amount. to the Statement of Profit or Loss during the financial period in which they are incurred. A revaluation surplus is recognised in other comprehensive income and credited to the revaluation surplus in equity. However, to the extent that it e. De-recognition reverses a revaluation deficit of the same asset previously recognised in the An item of property, plant and equipment is de-recognised upon disposal or Statement of Profit or Loss, in which case the increase is recognised in the when no future economic benefits are expected from its use or disposal. Any Statement of Profit or Loss. A revaluation deficit is recognised in profit or gain or loss arising on de-recognition of the asset (calculated as the difference loss, except to the extent that it offsets an existing surplus on the same asset between the net disposal proceeds and the carrying amount of the asset) is recognised in the asset revaluation reserve. Upon disposal or de-recognition, included in the Statement of Profit or Loss when the asset is de-recognised. The any revaluation reserve relating to the particular asset being sold is transferred revaluation surplus included in the equity in respect of an item of property, to retained earnings. plant and equipment is transferred directly to equity when the assets in de- recognised. An annual transfer from the asset revaluation reserve to retained earnings is made for the difference between depreciation based on the revalued carrying 2.3.4 Intangible Assets amount of the assets and depreciation based on the assets original cost. The Company’s intangible assets include the value of computer software. An c. Depreciation intangible asset is recognised only when its cost can be measured reliably and it is probable that the expected future economic benefits that are attributable Depreciation is calculated on a straight-line basis over the useful life of assets to it will flow to the Company. or components. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each reporting date and adjusted prospectively, if appropriate.
61 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
Amortisation is calculated using the straight-line method to write down the b. Subsequent measurement cost of intangible assets to their residual values over their estimated useful The subsequent measurement of financial assets depends on their lives as follows: classification. Cash, short term deposits, trade and other receivables constitute financial assets classified as loans and receivables for measurement purposes. Computer software 8 years Loans and receivables which are subsequently stated at amortised cost are The useful lives of intangible assets are assessed to be either finite or indefinite. non-derivative financial assets with fixed or determinable payments that are Intangible assets with finite lives are amortised over the useful economic life. not quoted in an active market. Trade and other receivables are subsequently The amortisation period and the amortisation method for an intangible asset stated at their nominal amount less impairment. with a finite useful life are reviewed at least at each financial year-end. c. Impairment of financial assets Changes in the expected useful life or the expected pattern of consumption of The Company assesses at each reporting date whether there is any objective future economic benefits embodied in the asset are accounted for by changing evidence that a financial asset or a group of financial assets is impaired. A the amortisation period or method, as appropriate, and treated as changes in financial asset or a group of financial assets is deemed to be impaired if, there accounting estimates. The amortisation expense on intangible assets with finite is objective evidence of impairment as a result of one or more events that has lives is recognised in the Statement of Profit or Loss in the expense category occurred after the initial recognition of the asset (an incurred ‘loss event’) and consistent with the function of the intangible asset. that loss event has an impact on the estimated future cash flows of the financial 2.3.5 Financial Instruments asset or the group of financial assets that can be reliably estimated. Financial Assets Financial assets carried at amortised cost: The Company’s financial assets include trade and other receivables, short term For financial assets carried at amortised cost, the Company first assesses deposits and cash and bank balances. whether objective evidence of impairment exists individually for all financial assets on a monthly basis. The objective evidences include: a. Initial recognition and measurement Financial assets within the scope of LKAS 39 are classified as financial assets • The settlements do not come within the given credit period or prolong at fair value through profit or loss, loans and receivables, held-to-maturity outstanding (over 180 days) balances. investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company • When return of a cheque takes place and the Company is unable to obtain a determines the classification of its financial assets at initial recognition. favorable solution from the debtors.
All financial assets are recognised initially at fair value plus, in the case of 2.3.6 Other Non-Financial Assets assets not at fair value through profit or loss, directly attributable transaction All other non financial assets are valued net of specific provision, where costs. necessary, so as to reduce the carrying value of such assets to their estimated realisable value.
62 Annual Report 2017/18
2.3.7 Impairment of Non-Financial Assets 2.3.8 Fair Value Measurement The Company assesses at each reporting date whether there is an indication Fair value is the price that would be received to sell an asset or paid to transfer that an asset may be impaired. If any such indication exists, or when annual a liability in an orderly transaction between market participants at the impairment testing for an asset is required, the Company makes an estimate measurement date. of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its The fair value measurement is based on the presumption that the transaction value in use and is determined for an individual asset, unless the asset does to sell the asset or transfer the liability takes place in the principal market not generate cash inflows that are largely independent of those from other for the asset or liability or in the absence of a principal market, in the most assets or groups of assets. Where the carrying amount of an asset exceeds its advantageous market for the asset or liability recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows The principal or the most advantageous market must be accessible by the are discounted to their present value using a pre-tax discount rate that reflects Company. current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation The fair value of an asset or a liability is measured using the assumptions that model is used. These calculations are corroborated by valuation multiples or market participants would use when pricing the asset or liability, assuming that other available fair value indicators. market participants act in their economic best interest.
Impairment losses of continuing operations are recognised in the Statement of The Company uses valuation techniques that are appropriate in the Profit or Loss in those expense categories consistent with the function of the circumstances and for which sufficient data are available to measure fair value, impaired asset, except for property previously revalued where the revaluation maximising the use of relevant observable inputs and minimising the use of was taken to equity. In this case the impairment is also recognised in equity up unobservable inputs. to the amount of any previous revaluation. All assets and liabilities for which fair value is measured or disclosed in the For assets, an assessment is made at each reporting date as to whether there Financial Statements are categorised within the fair value hierarchy, described is any indication that previously recognised impairment losses may no longer as follows, based on the lowest level input that is significant to the fair value exist or may have decreased. If such indication exists, the Company makes an measurement as a whole: estimate of recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the Level 1 — Quoted (unadjusted) market prices in active markets for identical asset’s recoverable amount since the last impairment loss was recognised. If assets or liabilities that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that Level 2 — Valuation techniques for which the lowest level input that is would have been determined, net of depreciation, had no impairment loss significant to the fair value measurement is directly or indirectly observable been recognised for the asset in prior years. Such reversal is recognised in the Statement of Profit or Loss unless the asset is carried at revalued amount, in Level 3 — Valuation techniques for which the lowest level input that is which case the reversal is treated as a revaluation increase. significant to the fair value measurement is unobservable
63 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
For assets and liabilities that are recognised in the Financial Statements on 2.3.12 Financial Liabilities a recurring basis, the Company determines whether transfers have occurred The Company’s financial liabilities include trade and other payable, bank between levels in the hierarchy by re-assessing categorisation (based on the overdrafts and interest bearing loans and borrowings. lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. a. Initial recognition and measurement Financial liabilities within the scope of LKAS 39 are classified as financial External valuers are involved for valuation of property, plant and equipment. liabilities at fair value through profit or loss, loans and borrowings, or as Involvement of external valuers is decided by the management after discussion derivatives designated as hedging instruments in an effective hedge, as with and approval by the Company’s Audit Committee. Selection criteria appropriate. The Company determines the classification of its financial include market knowledge, reputation, independence and whether professional liabilities at initial recognition. standards are maintained. All financial liabilities are recognised initially at fair value and, in the case 2.3.9 Operating Leases of loans and borrowings, carried at amortised cost. This includes directly Leases of assets under which all the risks and benefits of ownership are attributable transaction costs (if any). effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit or Loss on a b. Subsequent measurement straight-line basis over the period of the lease. The measurement of financial liabilities depends on their classification as follows: 2.3.10 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is Loans and borrowings: determined by the weighted average method. The cost of the inventory After initial recognition, interest bearing loans and borrowings are comprises purchase price, taxes (other than those subsequently recoverable subsequently measured at amortised cost using the effective interest rate by the Company from the tax authorities), and transport, handling and other method (EIR). Gains and losses are recognised in the Statement of Profit or Loss costs directly attributable to the acquisition of finished goods. It excludes the when the liabilities are de-recognised as well as through the effective interest borrowing costs, trade discounts, rebates and other similar items are deducted rate method (EIR) amortisation process. in determining the costs of purchase. c. De-recognition Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses. A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is 2.3.11 Cash and Cash Equivalents replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange Cash and cash equivalents in the Statement of Financial Position comprise or modification is treated as a derecognition of the original liability and the cash at banks and on hand and short term deposits with maturity of three recognition of a new liability, and the difference in the respective carrying months or less. For the purposes of the Statement of Cash Flows, cash and cash amounts is recognised in the Statement of Profit or Loss. equivalents comprise cash and short term deposits as defined above, net of outstanding bank overdrafts. 64 Annual Report 2017/18
2.3.13 Other Non-Financial Liabilities 2.3.16 Dividend Distribution Other non-financial liabilities are recognised at their monetary amount. Dividend distribution to the Company’s shareholders is recognised as a liability in the Financial Statements in the period in which the dividends are approved 2.3.14 Provisions by the Company’s shareholders. Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow 2.3.17 Taxation of resources embodying economic benefits will be required to settle the Current income tax assets and liabilities for the current period are measured at obligation, and a reliable estimate of the amount of the obligation can be made. the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are 2.3.15 Employee Benefits enacted or substantively enacted, at the reporting date. a. Defined contribution plans Current income tax relating to items recognised directly in equity is recognised All employees of the Company are members of the Employees’ Provident Fund in equity and not in the Statement of Profit or Loss. Management periodically and the Employees’ Trust Fund, to which the Company contributes 12% and evaluates positions taken in the tax returns with respect to situations in 3% respectively of such employees’ basic or consolidated wage or salary and which applicable tax regulations are subject to interpretation and establishes cost of living and all other allowances. provisions where appropriate. The Company’s contributions to the defined contribution plans are charged to Deferred tax the Statement of Profit or Loss in the year to which they relate. Deferred tax is provided using the liability method on temporary differences b. Defined benefit plan between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. The liability recognised in the Statement of Financial Position in respect of defined benefit plans is the present value of the defined benefit obligation Deferred tax liabilities are recognised for all taxable temporary differences. at the reporting date together with past service cost. The defined benefit obligation is calculated by independent actuaries using the projected Deferred tax assets are recognised for all deductible temporary differences, unit credit method. The present value of the defined benefit obligation is carry forward of unused tax credits and unused tax losses, to the extent that determined by discounting the estimated future cash outflows using interest it is probable that taxable profit will be available against which the deductible rates of treasury bonds that are denominated in the currency in which the temporary differences, and the carry forward of unused tax credits and unused benefits will be paid and that have terms to maturity approximating to the tax losses can be utilised. terms of the related liability. The carrying amount of deferred tax assets is reviewed at each reporting date Actuarial gains and losses arising from experience adjustments and changes in and reduced to the extent that it is no longer probable that sufficient taxable actuarial assumptions are charged to the Statement of Other Comprehensive profit will be available to allow all or part of the deferred tax asset to be Income. utilised. Un-recognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. 65 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
Deferred tax assets and liabilities are measured at the tax rates that are The Company has identified following key areas which relates to the business expected to apply in the year when the asset is realised or the liability is settled, operation, as having most impact from SLFRS 15 based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Receipt of advances and Gift cards Credit card promotions / rebates Turnover based taxes Shop rental revenue with increment Turnover based taxes include Value Added Tax, Nations Building Tax and Travel agent contracts with bundle services Tourism Development Levy. Company pays such taxes in accordance with the respective statutes Pending the completion of the detail impact analysis, possible impact from SLFRS 15 is not estimable as of the reporting date. 2.3.18 Revenue Recognition Room revenue is recognised on the rooms occupied on daily basis. SLFRS 9 – Financial Instruments SLFRS 9 replaces the existing guidance in LKAS 39 Financial Instruments: Food and Beverage revenue is recognised at the time of sales. Recognition and Measurement. SLFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected Other revenues and income earned by the Company including other hotel credit loss model for calculating impairment on financial assets, and new revenue and interest income are recognised on an accrual basis general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from LKAS 39. 3. STANDARDS ISSUED BUT NOT YET EFFECTIVE SLFRS 15 – Revenue from Contracts with Customers SLFRS 9 is effective for annual periods beginning on or after 1 January 2018, The objective of this Standard is to establish the principles that an entity shall with early application permitted. Except for hedge accounting, retrospective apply to report useful information to users of financial statements about the application is required but providing comparative information is not nature, amount, timing and uncertainty of revenue and cash flows arising from compulsory. a contract with a customer. The Company plans to adopt the new standard on the required effective date SLFRS 15 establishes a five-step model to account for revenue arising from and will not restate comparative information. During 2018, the Company has contracts with customers. Under SLFRS 15, revenue is recognised at an amount performed a detailed impact assessment of SLFRS 9. that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue The Company expects no significant impact on its statement of financial standard will supersede all current revenue recognition requirements under position and equity except for the effect of applying the impairment SLFRS. Either a full retrospective application or a modified retrospective requirements of SLFRS 9. In addition, the Company will implement changes in application is required for annual periods beginning on or after 1 January classification of certain financial instruments. 2018. Early adoption is permitted. The Company plans to adopt the new standard on the required effective date using the full retrospective method.
66 Annual Report 2017/18
SLFRS 16 - Leases SLFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘Lessee’) and the supplier (‘Lessor’). SLFRS 16 will replace Sri Lanka Accounting Standard – LKAS 17 (Leases) and related interpretations.
SLFRS 16 introduces a single accounting model for the lessee, eliminating the present classification of leases in LKAS 17 as either operating leases or finance leases.
The new Standard requires a lessee to:
- recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value
- present depreciation of lease assets separately, from interest on lease liabilities in the Statement of Profit or Loss.
SLFRS – 16 substantially carries forward the lessor accounting requirement in LKAS – 17. Accordingly, a lessor continues to classify its leases as operating lease or finance lease, and to account for those two types of leases differently.
SLFRS -16 will become effective on 1 January 2019. The impact on the implementation of the above Standard has not been quantified yet.
67 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
4. REVENUE For management purposes, the Company is organised into business units based on the nature of services rendered, namely Room Sales, Food and Beverage Sales and Other Hotel Related Revenue. The Board monitors the operating results for the purpose of performance assessment. Assets and Liabilities are managed on a collective basis and are not allocated to operating segments.
4.1 Summary Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
Gross turnover 3,085,143 3,061,048 Less: Turnover tax / Nation Building tax (98,651) (96,226) Net turnover 2,986,492 2,964,822
4.2 Segmentation of the Revenue Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
Room sales 1,306,594 1,395,107 Food & Beverage sales 1,596,793 1,482,763 Other hotel related revenue 83,105 86,952 Total revenue 2,986,492 2,964,822
5. OTHER INCOME AND EXPENSES Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
(Loss) on disposal of property, plant and equipment (1,058) (11,751) Sundry income 13,599 7,248 Other income and expenses 12,541 (4,503)
68 Annual Report 2017/18
6. PROFIT BEFORE TAX The following items have been charged /(credited) in arriving at profit/(loss) before tax:
Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
Directors' emoluments 2,580 2,513 Auditors remuneration - audit fees 846 805 - non audit fees 424 324 Depreciation on property, plant and equipment (Note 12) 237,422 218,305 Amortisation of intangible assets (Note 13) 5,560 4,806 Repair and maintenance expenditure 65,183 84,005 Operating lease rentals on property 140,753 45,358 Staff costs (Note 7) 484,415 413,562 Power and energy expenditure 167,567 145,732 Loss on disposal of property, plant and equipment 1,058 11,751 Loss on disposal of cutlery and linen 8,827 15,923 Marketing and promotional fee 137,500 155,306
7. STAFF COSTS Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
Wages and salaries 316,006 279,044 Cost of meals 110,964 89,065 Defined contribution plans 43,871 39,022 Post employment benefit obligation (Note 23.2) 13,574 6,431 Staff costs 484,415 413,562
69 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
8. FINANCE INCOME Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
Interest income 8,765 20,905 8,765 20,905
9. FINANCE EXPENSES Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
Interest expenses (77,554) (104,744) Foreign exchange gain 7,672 24,682 Foreign exchange loss (20,031) (54,567) (89,913) (134,629) Net finance income / (expenses) (81,148) (113,724)
10. TAXATION Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
10.1 Current income tax 6,197 6,471 (Over)/under provision in respect of previous years 295 - Economic service charge 12,301 - Deferred tax (Note 18.1) 29,982 38,199 Income tax expense 48,775 44,670
70 Annual Report 2017/18
10.2 Reconciliation of accounting profit to income tax expense Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
Profit/(loss) before tax 187,929 425,016 Disallowable expenses 282,502 256,867 Allowable expenses (399,742) (445,397) Tax credits utilisation (27,809) (203,463) Interest income 8,765 20,905 Taxable income 51,645 53,928 Income tax @ 12% Tax on taxable income 6,197 6,471 Current tax expense 6,197 6,471
11. BASIC EARNINGS PER SHARE Basic earnings per share is calculated by dividing the net profit/(loss) attributable to shareholders by the weighted average number of ordinary shares in issue during the year.
Year ended 31 March 2018 2017
Net profit attributable to shareholders - Rs. ‘000 139,154 380,346 Weighted average number of ordinary shares in issue - ‘000 242,000 242,000 Basic earnings per share (Rs.) 0.58 1.57
71 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
12. PROPERTY, PLANT AND EQUIPMENT 12.1 Year ended 31 March 2017 Buildings and Plant, machinery Furniture & Motor vehicles Linen, cutlery, Total building & equipment fittings crockery & integrals glassware Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Cost/valuation Balance as at 1 April 2016 3,412,113 530,511 285,343 17,766 146,668 4,392,400 Additions 21,495 68,217 93,011 - 60,678 243,400 Disposals (15,949) (5,163) (864) - - (21,976) Disposals - breakages, losses & discarded - - - - (34,271) (34,271) Revaluation (281,660) (42,007) (9,168) - - (332,835) Balance as at 31 March 2017 3,135,998 551,558 368,322 17,766 173,074 4,246,718
Depreciation Balance as at 1 April 2016 298,140 189,692 76,460 8,022 76,987 649,301 Depreciation charge 80,673 73,218 32,669 1,920 29,825 218,305 Disposals (1,674) (2,764) (436) - - (4,874) Disposals - breakages, losses & discarded - - - - (18,348) (18,348) Revaluation (377,138) (27,709) (6,959) - - (411,807) Balance as at 31 March 2017 - 232,437 101,735 9,942 88,464 432,578
Net book value as at 31 March 2017 3,135,998 319,121 266,586 7,824 84,611 3,814,140
Capital work in progress Balance as at 1 April 2016 48,374 Cost incurred during the year 2,533 Amount transferred to property, plant and (4,157) equipment Balance as at 31 March 2017 46,750
Total net book value as at 31 March 2017 3,135,998 319,121 266,586 7,824 84,611 3,860,890
72 Annual Report 2017/18
Year ended 31 March 2018 Buildings and Plant, machinery Furniture & Motor vehicles Linen, cutlery, Total building & equipment fittings crockery & integrals glassware Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Cost/valuation Balance as at 1 April 2017 3,135,998 551,558 368,322 17,766 173,074 4,246,718 Additions 19,350 99,000 36,880 - 56,546 211,776 Disposals (708) (8,886) (6,256) - - (15,850) Disposals - breakages, losses & discarded - - - - (24,208) (24,208) Balance as at 31 March 2018 3,154,640 641,672 398,946 17,766 205,412 4,418,436
Depreciation Balance as at 1 April 2017 - 232,437 101,735 9,942 88,464 432,578 Depreciation charge 74,682 84,864 38,498 1,074 38,304 237,422 Disposals (42) (5,300) (2,788) - - (8,130) Disposals - breakages, losses & discarded (15,020) (15,020) Balance as at 31 March 2018 74,640 312,001 137,445 11,016 111,748 646,850
Net book value as at 31 March 2018 3,080,000 329,671 261,501 6,750 93,664 3,771,586
Capital work in progress Balance as at 1 April 2017 46,750 Cost incurred during the year 80,275 Balance as at 31 March 2018 127,025
Total net book value as at 31 March 2018 3,080,000 329,671 261,501 6,750 93,664 3,898,611
73 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
12. PROPERTY, PLANT AND EQUIPMENT (CONTD...) 12.2 Fair Valuation Process and Key Valuation Assumptions The Company measures buildings and building integrals at revalued amounts. The Company usually engages an external qualified valuer on a regular basis to determine the fair values.
The latest revaluation has been carried out by Mr. P B Kalugalagedera (F.I.V Sri Lanka) a chartered independent valuer as at 31 March 2018. The revaluation carried out resulted in a fair value which approximated with the carrying value as at 31 March 2018, and hence no additional revaluation surplus arose in the financial year 2018. The valuation of the buildings and integrals located at principal place of business, No. 48, Janadhipathi Mawatha, Colombo 1 have been determined using direct comparison method by using level 3 of the fair value measurement hierarchy.
For level 3 fair value measurement, quantitative information about the key significant unobservable inputs used in the fair value measurement, together with sensitivity information are as follows:
Valuation Input 2018 2017 Other Key Information used
Price per squar foot (range) Rs. 11,500/- to Rs. 20,700/- Rs. 11,750/- to Rs. 21,000/- - Age of the structure and remaining useful life
Significant increase or decrease in estimated price per square foot in isolation would result in a significantly higher or lower fair value measurement. Accordingly, a change of Rs. 1,000/- in estimated price per squarefoot will cause a Rs. 156.3 Mn change in the fair value of buildings and building integrals, directionally.
12.3 Reconciliation of revalued property, plant and equipment is more fully disclosed in Note 12.1.
12.4 The Hotel building is constructed on land obtained from the Ceylon Tourist Board on a 99 years lease commencing from 9 May 1970, for which the Company pays a sum of Rs. 2.5 Mn annually as operating lease rental disclosed in Note 25.(b).
74 Annual Report 2017/18
12.5 If the buildings and building integrals were stated at historical cost, the carrying amounts would be as follows:
Asset category Cost Accumulated Net book depreciation value Rs ‘000 Rs ‘000 Rs ‘000
Buildings and building integrals 2,632,024 462,110 2,169,914 2,632,024 462,110 2,169,914
12.6 The Company regulary reviewed the useful life of each significant component of buildings and in the review process, the Company obtains the assistance of an independent professional valuer. Accordingly, depreciation is calculated for the year using a straight line method for each individual significant component of building.
Components included in buildings and building integrals and their useful lives are as follows:
- Buildings superstructure 50 years - Bathrooms 15 years - Ballroom finishes 20 years - Elevators 25 years - Mechanical and engineering 25 years
12.7 During the previous year the management has carried out a comprehensive study of fixed asset register of the Company along with a physical verification. In that exercise, the management has noted the need to make suitable adjustments in the nature of removing non existing items, and other relevant adjustments to carrying values. Accordingly a net adjustment amounting to Rs. 14,524,947/- was made against revaluation reserve in the year 2017.
12.8 The Company has entered into a mutual understanding with Platinum Reality Investments (Private) Limited and the individual apartments owners to “Lease and Manage” 40 apartments along with Spa, Restaurant, Kitchen and meeting rooms of a luxury residential condominium named “Platinum 1” situated at No 1, Bagatalle Road, Colombo 3. Included in the property, plant & equipment assets having a cost amount of Rs. 62 Mn that relates to this arrangement, of which the Net Book Value as at 31 March 2018 amounts to Rs. 44.7 Mn (2017 - Rs. 51.3 Mn). This arrangement is considered as a separate Cash Generating Unit (CGU) and the Company has assessed the recoverability of the assets in accordance with LKAS 36 and concluded that there is no impairment required. Significant judgements and assumptions were involved in this assessment.
75 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
Key assumptions used in the assessment of recoverability. Gross margin The basis used to determine the value assigned to the budgeted gross margins is the gross margins achieved in the year preceding the budgeted year adjusted for the projected market conditions. Gross margin ranging from 65% - 75% has been used.
Inflation The basis used to determine the value assigned to the budgeted cost inflation is the inflation rate, based on projected economic conditions ranging from 3% - 5%.
Occupancy growth rate Occupancy rate ranging between 55% to 65% has been budgeted by taking into account the growth in occupancy rates in the past two years and forecasts.
Significant increase or decrease in key assumptions in isolation would result in a higher or lower recoverable amounts as follows:
- A negative change in gross margin below 67% will cause an impairment while other key assumptions are intact. - A positive change in inflation of costs above 7% will cause an impairment while other key assumptions are intact. - A negative change in occupancy below 59% will cause an impairment while other key assumptions are intact.
The recoverable amount estimated by using the above key assumptions is higher than the carrying value of the property, plant & equipment.
76 Annual Report 2017/18
13. INTANGIBLE ASSETS As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Cost Balance as at 1 April 43,937 37,723 Additions during the year 1,257 6,214 Balance as at 31 March 45,194 43,937
Amortisation Balance as at 1 April 18,420 13,614 Amortisation during the year 5,560 4,806 Balance as at 31 March 23,980 18,420
Net Book Value 21,214 25,517
The intangible assets consist of computer software
14. INVENTORIES As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Food, beverages and tobacco 47,776 34,838 Other inventories 26,277 38,166 Inventories 74,053 73,004
77 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
15. TRADE AND OTHER RECEIVABLES As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Trade receivables 130,921 125,255 Less: Impairment allowances (7,925) (2,565) 122,996 122,690
Intercompany receivables (Note 29.3) 24,585 5,211 Trade and other receivables 147,581 127,901
16. OTHER NON FINANCIAL ASSETS As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Prepayments 18,849 19,225 Advances to suppliers 4,464 13,398 Advances to employees 12,278 11,177 Security deposits 19,054 19,661 Other receivables 12,666 29,109 Other non-financial assets 67,311 92,570
17. SHORT TERM DEPOSITS As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Investments more than 3 months 100,934 - Investments less than 3 months - 347,949 Other current financial assets 100,934 347,949
78 Annual Report 2017/18
18. DEFERRED TAX LIABILITY 18.1 Deferred income taxes are calculated on temporary differences under the liability method using a tax rate of 14% (2017 - 12%), which is the tax rate effective from 01 April 2018 as per the Inland revenue Act No. 24 of 2017. The effect of the change in tax rate was Rs. 34,467,940/-.
As at 31 March Statement of Financial Position Statement of Profit or Loss Statement of other Comprehensive Income 2018 2017 2018 2017 2018 2017 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Deferred Tax Liability Capital Allowance for tax purpose 352,965 313,246 44,641 28,212 (4,923) 4,783 352,965 313,246 Deferred Tax Assets Defined Benefit Plans 7,094 4,742 (2,230) (517) (123) (541) Un-used Tax Losses 114,126 101,697 (12,429) 10,504 - - 121,220 106,439 Net Deferred Tax Liability 231,745 206,808 Deferred Tax Expense /(Benefit) 29,982 38,199 (5,046) 4,242
18.2 Inland Revenue Act No. 24 of 2017 comes into operation on 1 April 2018. As a reseult the income tax rate of the Company has increased to 14% (2017-12%). Therefore deferred taxes have been calculated at the tax rate of 14%.
18.3 The Company has carried forward tax losses of Rs. 815,187,173/- (2017 - Rs. 842,996,794/-) as at reporting date. Deferred tax assets has been recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.
79 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
18.4 The movement on the deferred income tax account is as follows:
As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Deferred tax assets As at 1 April 106,439 115,885 Income statement release 14,658 (9,987) Tax income recognized in Other Comprehensive Income 123 541 As at 31 March 121,220 106,439
Deferred tax liabilities As at 1 April 313,247 280,252 Deferred tax on amount transferred to revaluation reserve - 11,457 Income statement charge 44,641 28,212 357,888 319,921 Deferred tax on amount transferred from revaluation reserve (4,923) (6,674) As at 31 March 352,965 313,246 Deferred tax liabilities (net) 231,745 206,808
80 Annual Report 2017/18
19. CASH AND CASH EQUIVALENTS As at 31 March 2018 2017 Rs ‘000 Rs ‘000
19.1 Cash at bank and in hand 194,050 148,793 Short term deposits less than 3 months - 347,949 Cash and short term deposits 194,050 496,742
19.2 For the purposes of the cash flow statement, the year end cash and cash equivalents comprise the following:
As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Cash and short term deposits 194,050 496,742 Bank overdraft (Note 22.1) (282,826) (93,707) Cash and Cash equivalents at the end of the period (88,774) 403,035
20. TRADE AND OTHER PAYABLES As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Trade payables 129,976 102,359 Intercompany payables (Note 29.4) 25,392 17,005 Accrued expenses 103,372 67,948 Service charge payable 23,798 25,769 Other payables 44,885 32,260 Payables to contractors - 17,514 Trade and other payables 327,423 262,855
81 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
21. OTHER NON FINANCIAL LIABILITIES As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Advances received for reservations 98,029 146,236 Reserve for breakages 6,387 1,096 VAT payable 14,514 15,126 Other payables 15,844 137,652 Other non financial liabilities 134,774 300,110
22. INTEREST BEARING BORROWINGS 22.1 Borrowings As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Current liabilities Bank overdraft 282,826 93,707 Borrowings from banks / Financial institutions 464,529 475,048 747,355 568,755 Non-current liabilities Borrowings from banks / Financial institutions 510,618 942,101 510,618 942,101 Total borrowings 1,257,973 1,510,856
82 Annual Report 2017/18
22.2 The details of the security pledged are are as follows: Nature of assets pledged Nature of Security
Leasehold land, buildings and fixtures A first ranking mortgage pari passu with DEG-Deutsche Investitions-und- Entwicklungsgesellschaft mbH (DEG) for a sum of Rs. 1,335,000,000/- A first ranking mortgage pari passu with Bank of Ceylon for a sum of USD 9,000,000 from and out of the loan plus interest and fees and expenses in favor of DEG Movable assets, furniture, equipment and technical equipment A first ranking mortgage for the (Note 12 - Plant, machinery & equipment, furniture & fittings, motor vehicles and linen, cutlery, crockery & glassware) balance sum of USD 1,000,000 from and out of the loan plus interest and fees and expenses in favor of DEG
22.3 Terms and conditions Description Bank / Financial Institution BOC DEG
Commencement date 1 October 2011 7 June 2013 End date 7 March 2019 15 December 2020 Grace period 1 year and 6 months 2 years Installment amount Rs. 17,171,717 USD 833,333 Interest rate AWPLR 3% + 6 months LIBOR Term 7 years & 6 months 8 years
83 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
23. POST EMPLOYMENT BENEFIT OBLIGATION 23.1 Gratuity Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
As at 1 April 39,519 30,703 Charge for the year (23.2) 14,447 10,939 Benefits paid (3,293) (2,123) As at 31 March 50,673 39,519
23.2 Charge for the year Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
Reported in Statement of Profit or Loss Current service cost 8,996 3,170 Interest cost 4,578 3,261 Service cost 13,574 6,431 Reported in Other Comprehensive Income Net actuarial (Gain) / Loss recognised immediately to Other Comprehensive Income 873 4,508 Charge for the year 14,447 10,939
84 Annual Report 2017/18
23.3 The Company obtained an actuarial valuation from an independent professional actuary, Messrs Actuarial and Management Consultants (Pvt) Ltd, in March 2018, to ascertain the post employment benefit obligation arising in respect of Gratuity.
The principal actuarial assumptions used in determining the liability were:
2018 2017
Discount rate (per annum) 11% 12% Future salary increase (per annum) 10% 11% Retiring age 55 years 55 years
Staff Tournover rate at age category Age Group Executives Non Executives
18 - 24 25% 25% 25 - 29 16% 25% 30 - 34 14% 16% 35 - 39 10% 12% 40 - 44 8% 11% 45 - 49 6% 10% 50 - 54 0% 5% >54 0% 0%
85 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
23.4 Sensitivity of assumptions employed in actuary valuation The following table demonstrates the sensitivity to a reasonably possible change in the key assumptions employed with all other variables held constant in the post employment benefit liability measurement.
Year ended 31 March 2018 Increase / (decrease) in Increase / (decrease) Effect on comprehensive Effect on post discount rate in salary increment Income increase / (decrease) in employment benefit obligation results for the year increase / (decrease) in the liability Rs ‘000 Rs ‘000
1% - 2,400 (2,400) (1%) - (2,647) 2,647 - 1% (2,882) 2,882 - (1%) 2,656 (2,656)
Year ended 31 March 2017 Increase / (decrease) in Increase / (decrease) Effect on comprehensive Effect on Post discount rate in salary increment Income increase / (decrease) in employment benefit obligation results for the year increase / (decrease) in the liability Rs ‘000 Rs ‘000
1% - 2,149 (2,149) (1%) - (2,388) 2,388 - 1% (2,399) 2,399 - (1%) 2,195 (2,195)
86 Annual Report 2017/18
23.5 Distribution of Post Employment Benefit Obligation Over Future Lifetime The following table demonstrates distribution of the future working lifetime of the Post Employment Benefit Obligation as at the reporting period.
As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Less than or equal 1 year 8,695 6,058 Over 1 year and less than or equal 5 years 23,522 14,555 Over 5 year and less than or equal 10 years 11,620 10,579 Beyond 10 years 6,836 8,327 Total 50,673 39,519
24. CONTINGENCIES Contingent liabilities There were no contingent liabilities outstanding at the reporting date, except for pending litigation in relation to:
(a) The application filed by legal counsel on behalf of the Company objecting the order made by the Learned Magistrate of Maligakanda Magistrate Court for the Company to pay 1% of the turnover of the Hotel as license fees to the Colombo Municipal Council (CMC). The Company filed a petition of appeal on 27 January 2011 in the court of appeal. The Court of appeal has abated the matter pending the decision of the court in the writ Application filed challenging the levying of 1% of Turnover as License Duty. (b) There are seven cases filed by the Colombo Municipal Council at the Maligakanda Magistrate Court for operating a restaurant without obtaining a requisite license in the years 2009 (13219/M), 2010 (14158/M), 2011 (15464/R), 2013 (28930/14), 2014 (16397/15), 2015 (15580/16) and 2016 (15689/17). The above cases will be called before the Magistrate’s Court of Maligakanda in following manner: Cases filed for 2009 and 2013 are fixed for trial on 14 May 2018 for trial, the case filed for 2010, 2011, 2014 and 2015 are fixed for trial on 21 May 2018 and the case filed for 2016 will be called on 14 May 2018 for objections against the charges filed respectively. (c) The writ application (766/2010) filed by the company challenging, inter alia, the decision taken by Colombo Municipal Council to levy license fees equivalent to 1% of the annual turnover as a pre-condition to issue Annual Trade License for year 2008, 2009 and 2010 in respect of the restaurant operated at hotel premises and this matter will be called on 14 June 2018.
87 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
25. COMMITMENTS a. Capital Commitments The Company has capital commitment as at the reporting date Rs. 93.4 Mn. (2017 - Rs. 23.9 Mn).
b. Operating Lease Commitments The future aggregate minimum lease payments under non cancellable operating leases are as follows :
As at 31 March Leasehold Land 2018 2017 Rs ‘000 Rs ‘000
Not later than 1 year 2,500 2,500 Later than 1 year and no later than 5 years 10,000 10,000 Later than 5 years 115,000 117,500 127,500 130,000
The Company has an annual commitment to pay a sum of Rs. 2.5 Mn to Ceylon Tourist Board as operating lease rental for the land on which the hotel building has been constructed.
The Company has a monthly commitment to pay a sum of Rs. 10,444,159/- to Platinum Reality Investments (Private) Limited and the individual apartments owners for “Lease and Manage” 40 apartments along with Spa, Restaurant, Kitchen and Meeting Rooms of a luxury residential condominium named “Platinum 1” situated at No. 1, Bagatalle Road, Colombo 3. There is no non-cancellabe period on these agreements.
26. STATED CAPITAL As at 31 March 2018 2017 Ordinary shares Ordinary shares Number ’000 Rs ’000 Number ’000 Rs ‘000
Balance at beginning of the year 242,000 836,000 242,000 836,000 Balance at end of the year 242,000 836,000 242,000 836,000
88 Annual Report 2017/18
27. REVALUATION RESERVE As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Revaluation reserve (Note 27.1) 904,808 940,907 Revaluation reserve 904,808 940,907
27.1 Revaluation Reserve The movement in the revaluation reserve is as follows: As at 31 March 2018 2017 Rs ‘000 Rs ‘000
At beginning of year 940,907 905,830 Revaluation gain during the year - 95,478 Deferred tax on revaluation gain - (11,457) Transfer to retained earnings* (41,022) (39,113) Revaluation adjustment made during the year (Net of deferred tax) - (14,525) Deferred tax on transfers to retained earnings 4,923 4,694 At end of year 904,808 940,907
*The amount transferred to retained earnings represents current year depreciation effect of the revaluation gain of previous years and the revaluation gain of those assets which disposed or de-recognised during the year.
89 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
28. CASH GENERATED FROM OPERATIONS 28.1 Reconciliation of profit before tax to cash generated from operations: Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
Profit before tax 187,929 425,016 Adjustments for: Depreciation on property, plant and equipment 237,423 218,305 Amortisation of intangible assets 5,560 4,806 Provision for bad and doubtful debts 5,360 (1,796) Interest income (8,765) (20,905) Interest expense 77,554 104,744 Foreign exchange loss, Net 12,359 29,885 (Profit)/loss on disposal of property, plant and equipment 9,885 33,024 Post employment benefit plans 13,574 6,431 Changes in working capital: - Receivable and prepayments 3,014 6,089 - Inventories (1,048) (7,569) - Payables 20,232 51,711 Net cash generated from / (used in) operations 563,076 849,740
28.2 Changes in liabilities arising from financing activities Year ended 31 March Balance as at Cash flows Foreign Other Balance as at 1 April 2017 exchange 31 March 2018 movement Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Interest bearing loans and borrowings 1,510,856 (453,630) (18,097) 218,843 1,257,972 Dividend payable 121,000 (121,000) - - - Total laibilities from financing activities 1,631,856 (574,630) (18,097) 218,843 1,257,972
90 Annual Report 2017/18
29. RELATED PARTY DISCLOSURE 29.1 Parent and ultimate controlling party Hayleys PLC holds 59.48% controlling interest of The Kingsbury PLC.
29.2 Transactions with the related parties during the year were as follows: Year ended 31 March Parent Fellow subsidiaries Entities connected to KMP Total 2018 2017 2018 2017 2018 2017 2018 2017 Nature of Transaction Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Rooms and banquet sales 14,831 20,438 51,325 25,889 26,584 18,698 92,740 65,025 Purchase of goods / services - - 30,474 10,528 26,172 26,503 56,646 37,031 Marketing and promotional fees 79,723 91,898 87,730 87,730 - - 167,453 179,627 Sectorial and administration charges 32,435 18,766 3,007 1,694 - - 35,442 20,460
29.3 Outstanding receivables balance arising from the above transactions: As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Parent 2,039 1,969 Fellow subsidiaries 22,546 3,242 Intercompany receivable 24,585 5,211
Entities connected to KMP 2,859 2,271
91 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
29.4 Outstanding payable balance arising from the above transactions: As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Parent 10,429 7,219 Fellow subsidiaries 14,963 9,787 Intercompany payable 25,392 17,006
Entities connected to KMP 698 557
All the above related party transactions have been conducted on relevat commercial terms with the respective parties. All related party outstanding balances at the year- end are unsecured, interest free other than in the case of funding arrangements and are to be settled in cash or its equivalents.
29.5 Key management compensation The Key Management Personnel (KMP) of the Company are the members of its Board of Directors and that of its parent.
Year ended 31 March 2018 2017 Rs ‘000 Rs ‘000
a. Key Management Personnel Compensation Short-term employee benefits 4,440 4,440 Directors employments 2,580 2,513 7,020 6,953 b. Transactions, with KMP and their close family members - Rooms and banquet sales 17,371 18,778
c. Outstanding receiveable/ (payable) balance arising from above transactions 2,012 1,993
92 Annual Report 2017/18
30. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES Financial instruments of the Company comprise financial assets and financial liabilities. Fair value is the amount at which the financial assets could be exchanged or a financial liability transferred, between knowledgeable and willing parties in an arm’s length transaction. The information presented herein represents the determination of fair values as at the reporting date.
30.1 Financial Instruments carried at Fair Value The Company does not have any financial instruments that are carried at Fair value as at the reporting date.
30.2 Financial Instruments not carried at Fair Value Given below is a comparison, by class, of the carrying amounts and fair values of the company’s financial instruments that are not carried at fair value in the Financial Statements. This table does not include the fair values of non–financial assets and non–financial liabilities.
As at 31 March 2018 2017 Carrying Value Fair Value Carrying Value Fair Value Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Financial assets Short term deposits 100,934 100,934 347,949 347,949 Cash and bank 194,050 194,050 148,793 148,793 Trade and other receivables 147,581 147,581 127,901 127,901 442,565 442,565 624,642 624,642 Financial liabilities Trade and other payables 327,423 327,423 262,855 262,855 Interest-bearing loans and borrowings 1,257,972 1,257,972 1,510,856 1,510,856
The following describes the methodologies and assumptions used to determine fair values for those financial instruments which are not recorded at fair value in the Financial Statements:
93 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
Other current financial assets and trade and other receivables and trade and other payables For the above, instruments with maturities of less than 12 months, the carrying value closely approximates with its fair values.
Trade and other payables For the above, instruments with maturities of less than 12 months, the carrying value is reasonably estimate of its fair values.
Interest-bearing loans and borrowings All the borrowings are obtained at variable interest rates. Hence the carrying value closely approximates with its fair values.
31. RISK MANAGEMENT 31.1 Introduction The Company has exposure to the following risks from its financial instruments;
1. Credit Risk 2. Liquidity risk 3. Market risk
The Board of Directors has the overall responsibility for the establishment and oversight of the Company’s risk management framework, which includes developing and monitoring the Company’s risk management policies.
The Audit Committee oversees how management monitors compliance with the risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by it. The Audit Committee is assisted in its oversight role by the Management Audit System Review Department (MASRD) of Hayleys PLC. MASRD undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
31.2 Credit Risk a. Introduction Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers.
Company has an established credit policy under which each new customer is reviewed individually for credit worthiness before standard payment and delivery terms are offered to the customer. The credit review includes bank and other reputed company references. Credit granted is subject to regular review, to ensure it remains consistent with the customer’s creditworthiness in relations to the anticipated volume of business.
The maximum exposure to credit risk is represented by the carrying value of each financial asset on the reporting date. 94 Annual Report 2017/18
b. The maximum exposure to credit risk at the reporting date As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Trade and other receivables 147,581 127,901
c. The ageing of the trade receivable at the reporting date As at 31 March Gross Receivable Impairment Allowance* Carrying Value 2018 2017 2018 2017 2018 2017 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Not due 0 - 30 days 92,828 78,354 - - 92,828 78,354 Past due: Past due 31 - 60 days 25,290 16,464 135 - 25,155 16,464 Past due 61 - 90 days 4,965 4,468 61 - 4,904 4,468 Past due 91 -120 days 6,115 1,491 1,000 - 5,115 1,491 Past due 121 - 180 days 7,386 1,568 294 649 7,092 919 More than 181 days 6,435 1,915 6,435 1,915 - - Total 143,019 104,259 7,925 2,565 135,094 101,695
* Movement in the Impairment Allowance
As at 31 March 2018 2017 Rs ‘000 Rs ‘000
Balance at 1 April 2,565 8,577 Impairment recognised 5,360 (1,796) Written-off - (4,216) Balance at 31 March 7,925 2,565
95 The Kingsbury PLC
NOTES TO THE FINANCIAL STATEMENTS
31.3 Liquidity Risk a. Introduction Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. b. The following are the contractual maturities of financial liabilities at its carrying value: As at 31 March 2018 Contractual maturities of financial liabilities Carrying Up to 3 3 - 12 1 - 5 Years amount Months Months Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Trade and other payables 327,423 271,096 15,492 40,835 Interest-bearing borrowings 1,289,945 490,684 255,501 543,760 1,617,368 761,780 270,993 584,595
As at 31 March 2017 Contractual maturities of financial liabilities Carrying Up to 3 3 - 12 1 - 5 Years amount Months Months Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Trade and other payables 262,855 210,628 9,967 42,260 Interest-bearing borrowings 1,655,854 309,378 332,654 1,013,822 1,918,709 920,006 342,621 1,056,082
c. If interest rate increased or decreased by 1% the effect of the same to the interest expenses and liability would be: Increase / Sensitivity effect on comprehensive Sensitivity effect on borrowings (decrease) in income increase / (decrease) in results liability increase / (decrease) in the interest rate for the year Liability Rs ‘000 Rs ‘000
1% (11,289) 11,289 (1%) 11,289 (11,289) 96 Annual Report 2017/18
31.4 Market Risk a. Introduction Market risk is the risk that the fair value of future cash flows of financial instruments will fluctuate due to the changers in market prices. Mainly the changes in market prices, such as foreign exchange rates and interest rates will affect the company’s income or the value of its holdings of financial instruments.
b. Foreign currency risk The Company is exposed to foreign currency risk on revenue, purchases, borrowings and cash deposits denominated in currencies other than the functional currency of the Company. The currencies giving rise to this risk are primarily US dollars, Sterling pounds, Euro and Japanese yen.
If market rate appreciate or depreciate by 1% the effect of the same to the exchange gain / (loss) would be:
As at 31 March Increase / (decrease) in Sensitivity effect on comprehensive market rate income increase / (decrease) in results for the year Rs ‘000
1% (124) (1%) 124
32. CAPITAL MANAGEMENT The Company’s capital structure consists of debt, which includes the loans and borrowings disclosed in note 22, cash and cash equivalents disclosed in note 19 and the equity, comprising share capital, reserves and retained earnings, as disclosed in the Statement of Changes in Equity. The Company seeks to maintain a balance between the higher returns that might be possible with reasonable levels of borrowings obtained to fund its long term projects as the hotel underwent upgrading.
33. EVENTS OCCURRING AFTER THE REPORTING DATE There were no material events occurring after the reporting date that require adjustments to or disclosure in the Financial Statements.
97 The Kingsbury PLC INFORMATION TO SHARE HOLDERS
Ordinary shareholders as at 31st March 2018
No. of shares held Residents Non Residents Total No. of No. of % No. of No. of % No. of No. of % Shareholders Shares Shareholders Shares Shareholders Shares
1 - 1,000 2,424 848,837 0.35 17 7,836 0.00 2,441 856,673 0.35 1,001 - 10,000 1,088 4,094,113 1.69 14 56,230 0.02 1,102 4,150,343 1.72 10,001 - 100,000 262 8,402,367 3.48 6 147,000 0.06 268 8,549,367 3.53 100,001 - 1,000,000 41 10,358,958 4.28 2 302,110 0.12 43 10,661,068 4.41 Over 1,000,000 18 217,782,549 89.99 0 0 0.00 18 217,782,549 89.99 3,833 241,486,824 99.79 39 513,176 0.21 3,872 242,000,000 100.00
Category Individuals 3,667 28,946,934 11.96 39 513,176 0.21 3,706 29,460,110 12.17 Institutions 166 212,539,890 87.83 0 0 0.00 166 212,539,890 87.83 3,833 241,486,824 99.79 39 513,176 0.21 3,872 242,000,000 100.00
Percentage of Public Holding 38.68% Total No. of Shareholders Represented in the Public Holding 3,867 Float Adjusted Market Capitalisation Rs. 1,684,900,800
The Company complies with option 5 of the listing rules 7.13.1 (a) – less than Rs. 2.5 Bn float adjusted market capitalisation which requires 20% minimum public holding.
98 Annual Report 2017/18
Share Transactions of First Twenty Shareholders as at 31.03.2018 (Decending Order)
Name of Shareholder No. of Shares No. of Shares as at 31.03.2018 % of Holding as at 31.03.2017 % of Holding
1 Hayleys PLC, Share Investment Account No. 3 112,307,057 46.41 112,307,057 46.41 2 Carbotels (Pvt) Ltd. 31,625,000 13.07 31,625,000 13.07 3 Employees’ Provident Fund 25,559,947 10.56 25,559,947 10.56 4 Bank of Ceylon, Ceybank Unit Trust Account 9,673,894 4.00 8,045,877 3.32 5 Bank of Ceylon, Account No. 2 7,833,500 3.24 7,833,500 3.24 6 Mr. K. D. A. Perera 6,581,352 2.72 6,581,352 2.72 7 National Savings Bank 4,469,876 1.85 4,669,876 1.93 8 Mr. K. D. D. Perera 3,216,146 1.33 - 0.00 9 Renuka Hotels Ltd. 2,371,300 0.98 2,371,300 0.98 10 Renuka City Hotels PLC 2,260,300 0.93 2,260,300 0.93 11 Associated Electrical Corporation Ltd. 2,133,400 0.88 2,124,400 0.88 12 Merchant Bank of Sri Lanka Ltd. & Finance PLC, Account No. 1 1,937,727 0.80 1,938,297 0.80 13 Renuka Consultants & Services Ltd. 1,835,100 0.76 1,835,100 0.76 14 Mr. K. D. H. Perera 1,453,567 0.60 1,453,567 0.60 15 People's Leasing & Finance PLC / Mr. L. P. Hapangama 1,227,700 0.51 1,227,700 0.51 16 Mr. M. H. Jamaldeen 1,186,583 0.49 1,186,583 0.49 17 Mr. A. P. Somasiri 1,100,000 0.45 1,000,000 0.41 18 Cargo Boat Development Company PLC 1,010,100 0.42 1,010,100 0.42 19 Sampath Bank PLC / Mrs. Priyani Dharshini Ratnagopal 1,000,000 0.41 1,200,000 0.41 20 Mrs. V. R. Jayasinghe 904,111 0.37 904,111 0.37 219,686,660 90.78 215,134,067 88.82
99 The Kingsbury PLC 5 YEAR FINANCIAL SUMMARY AND KEY INDICATORS
31 March 2018 2017/18 2016/17 2015/16 2014/15 2013/14 Rs ‘000 % Rs ‘000 % Rs ‘000 % Rs ‘000 % Rs ‘000 %
Revenue Rooms 1,306,594 44 1,395,107 47 1,184,102 45 1,082,468 46 990,553 46 Food & Beverages 1,596,793 53 1,482,763 50 1,345,185 51 1,196,535 51 1,114,205 52 Other Operating Income 83,105 3 86,952 3 87,202 3 56,724 2 38,528 2 Total Revenue 2,986,492 100 2,964,822 100 2,616,489 100 2,335,727 100 2,143,285 100 Direct Cost Food & Beverage Cost 661,287 22 571,473 19 506,877 19 461,371 20 453,020 21 Cost of Sales 661,287 22 571,473 19 506,877 19 461,371 20 453,020 21
Gross Operating Profit 2,325,205 78 2,393,349 81 2,109,612 81 1,874,356 80 1,690,265 79 Expenses Administration & General 1,493,970 50 1,298,944 44 1,053,851 40 971,685 42 904,004 42 Advertising & Sales 98,966 3 98,314 3 97,795 4 63,496 3 79,095 4 Heat, Light & Power 167,567 6 145,732 5 137,972 5 146,257 6 150,304 7 Repairs & Maintenance 65,183 2 84,005 3 74,211 3 57,072 2 69,136 3 Operating Expenses 1,825,686 61 1,626,995 55 1,363,829 52 1,238,510 53 1,202,539 56
Operating Profit 499,519 17 766,354 26 745,783 29 635,846 27 487,727 23 Other Income and Expenses 12,541 0 (4,503) (0) 2,919 0 5,559 0 2,156 0 De-recognition of Property, plant and equipment ------(9,369) (0) - - 512,060 17 761,851 26 748,702 29 632,036 27 489,883 23
Net Finance Expenses 81,148 3 113,724 4 169,889 6 129,594 6 274,378 13 Depreciation 242,983 8 223,110 8 220,952 8 202,321 9 181,910 8 324,131 11 336,834 11 390,841 15 331,915 14 456,288 21 Profit Before Tax 187,929 6 425,016 14 357,861 14 300,121 13 33,595 2
Income Tax Expenses (48,775) (2) (44,670) (2) (64,493) (2) (8,698) (0) (874) (0)
Net Profit/(Loss) After Tax 139,154 5 380,346 13 293,368 11 291,423 12 32,721 2
Re-measurement Gain/(Loss) on Defined Benefit Plans (873) (0) (4,508) (0) (6,102) (0) (2,117) (0) (1,123) (0) Income Tax Effect on Defined Benefit Plans 122 0 541 0 732 0 254 0 135 0 Other Comprehensive Income/(Loss) for the Year, Net of Tax (750) (0) (3,967) (0) (5,370) (0) (1,864) (0) (988) (0) Total Comprehensive Income for the Year, Net of Tax 138,404 5 376,379 13 287,998 11 289,560 12 31,733 1 100 Annual Report 2017/18
31 March 2018 2017/18 2016/17 2015/16 2014/15 2013/14 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000
Operating Results Total Revenue 2,986,492 2,964,822 2,616,489 2,335,727 2,143,285 Sales Growth % 0.73 13.31 12.02 8.98 995.74 Operating Profit 499,519 766,354 745,783 635,846 487,727 Net Profit/(Loss) Before Tax 187,929 425,016 357,861 300,121 33,595 Net Finance Expenses 81,148 113,724 169,889 129,594 274,378 Depreciation 242,983 223,110 220,952 202,321 181,910
Capital Employed Stated Capital 836,000 836,000 836,000 836,000 836,000 Revaluation & Other Reserves 904,808 940,907 905,830 930,576 952,126 Retained Earnings 793,072 613,646 440,154 196,636 (117,414) Shareholder's Fund 2,533,880 2,390,553 2,181,984 1,963,212 1,670,713 Assets Employed Non Current Assets 3,919,825 3,886,407 3,815,582 3,861,454 3,819,611 Net Current Assets (592,909) (307,426) (88,412) (69,219) 64,333 3,326,916 3,578,981 3,727,170 3,792,234 3,883,944
Long Term Liabilities 561,291 981,620 1,380,819 1,723,584 2,115,492 Deferred Liabilities 231,745 206,808 164,367 105,439 97,739 2,533,880 2,390,553 2,181,984 1,963,212 1,670,713
Key Indicators Current Ratio 0.51 0.73 0.90 0.91 1.11 Net Assets Per Share 10.47 9.88 9.02 8.11 6.90 Market Price Per Share 18.00 15.50 15.00 16.00 12.80 Earnings Per Share 0.58 1.57 1.21 1.20 0.15 101 The Kingsbury PLC NOTICE OF MEETING
NOTICE IS HEREBY GIVEN that the Forty Ninth Annual General Meeting of The Kingsbury PLC, will be held at the Hayleys Conference Room, No. 400, Deans Road, Colombo 10, Sri Lanka, on Friday 22nd June 2018 at 3.00 p.m. and the business to be brought before the meeting will be:
AGENDA 1) To consider and adopt the Annual Report of the Board of Directors and the Statements of Accounts for the year ended 31st March 2018, with the Report of the Auditors thereon. 2) To re-elect Mr. A. M. Pandithage who retires by rotation at the Annual General Meeting, a Director. 3) To re-elect Mr. N. J. De S. Deva-Aditya who retires by rotation at the Annual General Meeting, a Director. 4) To re-elect Mr. S. J. Wijesinghe who retires by rotation at the Annual General Meeting, a Director. 5) To ratify the sum of Rs. 40,000/- made as donations for the year 2017/18 in excess of the sum approved by the shareholders. 6) To authorise the Directors to determine contributions to Charities for the financial year 2018/19. 7) To authorise the Directors to determine the remuneration of the Auditors, Messrs. Ernst & Young, Chartered Accountants, who are deemed to have been re-appointed as Auditors in terms of Section 158 of the Companies Act No. 07 of 2007 for the financial year 2018/19. 8) To consider any other business of which due notice has been given.
Note :
A Shareholder is entitled to appoint a proxy to attend and vote instead of himself/herself and a proxy need not be a shareholder of the Company. A Form of Proxy is enclosed for this purpose. The instrument appointing a proxy must be deposited with Hayleys Group Services (Pvt) Ltd, Secretaries, No. 400, Deans Road, Colombo 10, Sri Lanka, by 3.00 p.m. on 20th June 2018.
By Order of the Board
THE KINGSBURY PLC
Hayleys Group Services (Private) Limited Secretaries Colombo
23rd May 2018
102 Annual Report 2017/18 FORM OF PROXY
I/We* ……………………………………………………………………………………………………………………………………………………………………...... ………………………………………………...... …………………………....…………...... …………………………...... (Full Name of Shareholder, NIC No. /Reg. No.**) of ……………………………………………………………… ………………………………………………………...... ………………………………………………...... ………………...... …………………………....…… ………………………………………………………………………… …………………………… …………………………...... …………………………...... … ……...……...... …… being a shareholder shareholders* of The Kingsbury PLC hereby appoint, 1 ………..……………………………………………………………………………...... (Full Name of Proxyholder and NIC No.**) of …………………...... or failing him/her/them,* 2. ABEYAKUMAR MOHAN PANDITHAGE (Chairman of the Company) of Colombo, or failing him, One of the Directors of the Company as my/our* proxy to attend, speak and vote as indicated hereunder for me/ us* and on my/our* behalf at the Forty Ninth Annual General Meeting of the Company to be held on 22nd June 2018 and at every poll which may be taken in consequence of the aforesaid meeting and at any adjournment thereof: For Against 1 . To adopt the Annual Report of the Directors and the Statements of Accounts for the year ended 31st March 2018 together with the Report of the Auditors thereon. 2. To re-elect, Mr. A. M. Pandithage who retires by rotation at the Annual General Meeting, a Director. 3. To re-elect, Mr. N. J. De S. Deva-Aditya who retires by rotation at the Annual General Meeting, a Director. 4. To re-elect, Mr. S. J. Wijesinghe who retires by rotation at the Annual General Meeting, a Director. 5. To ratify the sum of Rs. 40,000/- made as donations for the year 2017/18 in excess of the sum approved by the shareholder. 6. To authorise the Directors to determine contributions to charities for the financial year 2018/19. 7. To authorise Directors to determine the remuneration of the Auditors, Messrs. Ernst & Young, Chartered Accountants, who are deemed to have been re-appointed as Auditors in terms of Section of section 158 of the Companies Act No. 07 of 2007 for the financial year 2018/19.
(***) The proxy may vote as he/she* thinks fit on any other resolution brought before the Meeting of which due Notice has been given.
As witness my/our* hands this ……………… day of ………………… 2018.
…………………………………………. Signature of Shareholder Witness Signature : …………………………………………. Name : …………………………………………. Address : ……………………………..…………... NIC No. : ………………………………..………...
Notes: (a) * Please delete the inappropriate words. (b) A shareholder entitled to attend and vote at the Annual General meeting of the Company, is entitled to appoint a proxy to attend and vote instead of him/her and the proxy need not be a shareholder of the Company. ** Full name of shareholder/proxy holder and their NIC No’s and Witness are mandatory. Your Proxy Form will be rejected if these details are not completed. (c) A shareholder is not entitled to appoint more than one proxy to attend on the same occasion. (d) Instructions are noted on the reverse hereof. (e) This “Form of Proxy” is in terms of the Articles of Association of the Company.
103 FORM OF PROXY
INSTRUCTIONS AS TO COMPLETION 1. To be valid, the completed Form of Proxy must be deposited with the Company Secretaries, Hayleys Group Services (Pvt) Ltd., at No. 400, Deans Road, Colombo 10, Sri Lanka more than 48 hours before the Meeting.
2. In perfecting the Form of Proxy, please ensure that all requested details are filled in legibly including mandatory details. Kindly Sign and fill in the date of signing.
3. If you wish to appoint a person other than the Chairman of the Company (or failing him, one of the Directors) as your proxy, please insert the relevant details at (1) overleaf. The proxy need not be a member of the Company.
4. Please indicate with an X in the space provided how your proxy is to vote on the resolutions. If no indication is given, the proxy in his/her discretion will vote as he/she thinks fit. Please also delete (***) if you do not wish your Proxy to vote as He/She thinks fit on any other resolution brought before the meeting.
5. In the case of a Company / Corporation the proxy must be under its common seal which should be affixed and attested in the manner prescribed by its Articles of Association. In the case of the individual shareholders, the signature of the shareholder should be witnessed by any person over 18 years of age.
6. Where the Form of Proxy is signed under a Power of Attorney (POA) which has not been registered with the Company, the original POA together with a photocopy of same or a copy certified by a Notary Public must be lodged with the Company along with the Form of Proxy.
7. In case of Marginal Trading Accounts (slash accounts), the form of Proxy should be signed by the respective authorised Fund Manager/Banker with whom the account is maintained. CORPORATE STRUCTURE
LEGAL FORM SECRETARIES A Public Limited Company Hayleys Group Services (Private) Limited No. 400, Deans Road, Incorporated in Sri Lanka on 4th May 1969 Colombo 10, Sri Lanka. COMPANY NUMBER Telephone +94 112 627 650 - 3 (4 Lines) PQ 203 Fax +94 112 627 645, +94 11 2627 655 DIRECTORS AUDITORS A. M. Pandithage - Executive Chairman Ernst and Young Chartered Accountants Dhammika Perera - Co-Chairman (Non-Executive) No. 201, De Saram Place, L. T. Samarawickrama - Managing Director Colombo 10, N. J. De S. Deva-Aditya Sri Lanka. S. C. Ganegoda S. J. Wijesinghe STOCK EXCHANGE LISTING L. N. De S. Wijeyeratne The Ordinary shares of the Company are listed with the Colombo Stock Exchange of Sri Lanka. Ms. R. N. Ponnambalam J. P. Van Twest REIGISTERED OFFICE D. E. Silva The Kingsbury Hotel Colombo Ms. I. Jamaldeen No. 48, Janadhipathi Mawatha, Ms. A. A. K. Amarasinghe (Alternate Director to Mr. Dhammika Perera) Colombo 01, Sri Lanka. AUDIT COMMITTEE L. N. De S. Wijeyeratne - Chairman Ms. R. N. Ponnambalam J. P. Van Twest
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